Top 3 Common Foreclosure Scams You Need to Watch Out For

In today’s day and age, you have to monitor your privacy and personal identity so diligently. From online identity theft to people stealing your social security number, everything you’ve worked for can be taken in an instant if you aren’t careful. There are many foreclosure scams to watch out for in today’s market.

Another target hackers can attack is your home if you aren’t looking out. Homeowners all want to find ways they can stop foreclosure in Michigan and stay afloat with payments on their home, but you have to be vigilant about what resources are out there and how people say they can help you.

Common Foreclosure Scams

Here are three widely used foreclosure scams that could take you from homeowner to homeless in the snap of a finger. 

Paying off your mortgage and eliminating PMI

1. The Phantom Help Scam

In this scam, you’ll be contacted by a loan counselor who says he or she can help you modify your loan, get you a better interest rate and get more cash in your pocket. They will claim to be in constant communication with your lender about negotiating deals for your benefit.

However, it will take some up-front cash on your end to put the process into motion. They’ll ask for you to give them $5,000 to $10,000 for processing fees.

In addition, they’ll advise you not to approach your current lender, so you don’t mess up the negotiations they’ve already agreed to. They may also end up telling you to start sending your mortgage payments directly to them as they work to get your account current, but after a few months, they will disappear, and you’ll be further behind on payments with less money in your account.

2. The Bait and Switch Scam

The bait and switch is one of the most popular foreclosure scams to watch out for. In this scam, the person on the other end will tell you they have a great new interest rate that you can take over immediately. You have to sign time-sensitive documents that they’ll tell you not to read because it’s just standard protocol. Once you sign the papers, you aren’t guaranteed any new interest rate.

Instead, you just signed over your home to the hacker. Once processed, they literally own your home and will have you evicted. They get a free house while you are still stuck paying the mortgage. Be very careful what you sign, and always read a contract especially if someone is advising against you reading it. 

3. Lender Settlement and Class-Action Scam

In this foreclosure scam, you aren’t told you’re in the wrong. Instead, the scammer will tell you your mortgage lender defaulted in some way, and you’re awarded a cash payout for their mishandling of funds. All they need to get you your winnings is your bank account information.

Once they receive the information, though, your account will end up with a big zero balance. You won’t get a payout from your lender, but the scammer will take everything from you. 

It’s a scary world how many ways people look to take advantage of others. If you find yourself financially strapped and behind on bills or in a foreclosure lawsuit, know there are ways to get out and avoid foreclosure scams. Working with a lawyer can help you settle and get back on track. However, make sure you’re careful because when you’re vulnerable is most likely when a scammer will try to strike. 

Leave a Comment