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Foreclosure recovery scams are marketed to homeowners as "foreclosure rescue". While sounding innocently magnanimous, it is neither. These scams are fraud.

The Scam Artist

These crafty creatures will send some warning signals they are not all they appear to be. He will be a stranger who approaches you with an unsolicited rescue offer. She will be calling your telephone, handing you a flyer or mailing you information on how to "save your home".

They change tactics with each new victim, have learned from victims who got away and those who they scammed. The offer to do all of the paperwork in the "comfort of your home" is a red flag. With no legitimate office, they are keeping their overhead low and mobility high. Remember, business cards are printed and shipped everyday for free.

Choosing a Victim

The targets of foreclosure rescue fraud are always "distressed" homeowners, ones who are either struggling to make mortgage payments or anxious to sell their homes. Many scam artists subscribe to foreclosure listing services to get first crack at homes in pre-foreclosure. Others will befriend an employee in a mortgage company from whom they will get names or addresses of homeowners in foreclosure danger.

They will stay away from homeowners with loyalty to the mortgage holder or a relationship with a credit counseling service. The scam artist will not beg. If told "no" more than twice, "I need my attorney to look at these papers," or "What is your company's Federal EIN?," the scam artist will not risk getting caught.

The Approach

Sam, the scam artist, will approach a distressed homeowner, James. He will offer to pay off James' delinquent mortgage and allow James to stay in his home, paying rent until his financial situation improves. To James, this sounds like a kind offer, since he will get to stay in his home and not have a foreclosure on his credit report. When James says "yes", Sam will bring in his partner, Paul.

The Investor

Sam will bring Paul to James' house. Paul will play the part of the investor, who wants to buy James' house as an investment property. Paul will tour the house and approve of the condition of the house. He will tell James he likes the idea of the property already having a tenant. Paul is in a hurry. He needs to sign the paperwork as soon as possible because he needs to travel out of town to view other properties or take care of other business.

Signing the Contract

Sam explains to James. Paul will buy the house from James and pay off the delinquent mortgage.

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