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James will get to stay in his home and pay rent. James signs a contract which transfers the deed of the house to Paul. Sam congratulates James on his "wise decision" to save his home and credit report from foreclosure.

Take the Money and Run

Paul's loan pays off James' delinquent mortgage balance. Without paying one penny, Paul has acquired the equity in James' house. With the deed with his name on it, Paul goes to the bank and removes all of the equity, with a home-equity loan. Paul goes on vacation.

Evicted from the Home

James and his family are living in the home which does not belong to them and paying rent to Paul by mail. James trusts that Paul is making payments on the house to keep it out of foreclosure. Paul never makes a loan payment. The bank forecloses on the house when the loan is defaulted and evicts James and his family from the house. James has lost his equity and his home.

Safeguards against Foreclosure Rescue Fraud

~ Learn your foreclosure rights.

~ Always deal with a reputable organization, in their office.

~ You should have plenty of time to read the documents. Do not be rushed to sign without reading and understanding every word. You may have a friend, relative or counselor with you. The deal should not be complicated on paper.

~ If you do not understand the contracts, ask questions or bring the paperwork to foreclosure counselor or a real estate attorney.

~ If the contracts have blanks or false information, do not sign. This is fraud which can be traced to you and for which you could be prosecuted and go to jail.

~ If approached by a scam artist, report to Consumer Fraud Reporting.

Foreclosure recovery scams never rescue the homeowner from his debt: They rob him of his equity. Protect yourself from these criminals and don't lose your home.

Learn more about this author, Ann Marie Dwyer.
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