If It Sounds To Good To Be True . . .

Foreclosure rescue scams are out there in abundance. My clients get calls, letters and knocks at the door from people who just want their house. But they will never tell that to the homeowner. In fact, they usually say the exact opposite. Many of the scams fall into two main categories: (1) Pretend help/consults; and (2) fake leasebacks/refinancing or bait and switch.

In the pretend help category, the “consultant” is not an attorney and is effectively practicing law without a license. Most of the time, the “consultant” has no licences at all. Not a real estate license. Not a mortgatge broker. The “rescuer” charges $1500 to $2500 to make some calls and never follows through. The homeowner calls and calls and can’t get a response. Usually, the “rescuer” is located in some other state far away. Eventually, the homeowner comes to my office for legal assistance just in the nick of time.

The fake sale/leaseback category involves different methods but the ultimate goal of the “rescuer” here is to get title to the property and flip it (resell it) for a profit. This usally involves a fake bailout where the homeowner thinks he or she will still own the property after a closing but in fact has actually conveyed a deed to a new owner. Some of these involve a fake refinancing where there is really no new loan to the homeowner. This is a type of bait and switch. The scammers will tell the victim that they are signing documents for a new loan that will solve their problems. In reality, they are signing documents that will transfer title. Sometimes, the crook will forge the documents.

Some rescue scams involve a fake leaseback where the homeowner is told he will get a lease to stay on as a renter and an option contact with the right to repurchase the property a year later. In many cases, the lease and option contract are not given and the new owner starts an eviction proceeding instead.

Of course, refinancing and leasebacks are still viable alternatives for homeowners. Don’t let anyone tell you otherwise. Some lawyers automatically shy away from these solutions because they are not familiar with the new laws that govern them or because they only do bankruptcies so that is the only solution they can offer. Don’t be pigeonholed into one solution when there are always several alternatives that should be considered to deal with foreclosure. Always keep in mind that the problem is not with the various “rescue” alternatives. The problem is with the supposed “rescuer” who is not a lawyer and only wants to scam the homeowner. The bottom line: a homeowner is always better off dealing with an attorney and real estate broker for this type of transaction because these professionals are licensed and regulated and have fiduciary duties to fulfill. Anyone who hires an unlicensed foreclosure consultant to save them or get them a new loan is asking for trouble.