by Joshua Talayka

Created on: May 27, 2010

Home Retention and Foreclosure alternative Scams

Scammers and con-artists tend to make a living by taking advantage of people who are vulnerable.  So it’s no surprise that with the number of people facing foreclosure, that we are seeing more and more scams that promise to rescue you from foreclosure. 

Now this doesn’t mean that every person or company that offers to help you avoid foreclosure is running a scam, because there are many legitimate consumer financial counseling agencies out there that can help you work with your lender.  You just have to be careful when trying to distinguish between the two.  If someone offers to help negotiate a loan modification between you and your lender, or work to stop or delay a foreclosure for a fee, you will want to carefully check his or her credentials and watch out for the warning signs of a scam.  In most cases, the immediate red flag to look for is whether or not they are requiring a substantial up front fee.

Common scams:

Foreclosure “rescue” –

This is where someone will offer to act as an intermediary between you and your lender to negotiate a modification or repayment plan.  In many cases they will tell you that you will need to make your payments to them directly, and they will then forward your payments to your lender.  They may also require you to pay up-front fees before they begin to help you. 

Although many legitimate agencies will require some upfront processing fees, they typically are not substantial amounts.  It should be an immediate red flag if someone is asking you to pay an excessive upfront non-refundable fee before they deliver any results, you should really question their service.  You should also never be required to make your mortgage payments to any one other than your lender/servicer. 

False “government” modification programs –

You may be approached by someone stating that they are affiliated a government program.  In many cases, their company/organization may have a name that closely resembles the name of one of them many government programs in order to appear legitimate, when in fact they may not be.  This tactic is designed to get you to put your guard down, at which point they will typically begin to tell you there are certain up front fees required to get you into these government programs.

There are many different government programs out there that are designed to

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