You may have seen the signs “Avoid Foreclosure! Call Now” and “Save Your Home” in some neighborhoods hard-hit by foreclosures. Some of these offers are legit. But some companies promising rescue from foreclosure charge borrowers to renegotiate their loan with lenders and then fail to do so.
And then you have the type of scam the Boston Globe wrote about recently. It’s so complicated, the flimflam guy who orchestrated it could have worked for Enron. The scam involved a “temporary transfer” of the foreclosed property to an investor brought in by a rescue company. In the situation promised by the rescue company, the investor would take out a mortgage on the property and give the full amount to the person undergoing foreclosure, who would then pay off the mortgage in full, keep the difference (promised to be around $100,000) and stay on as a tenant and pay the investor monthly rent. Sound too good to be true?
Of course it is! The rescue company used the investor’s name to take out multiple lines of credit on rental properties and then they gave the man facing foreclosure a small portion of the promised amount ($6,500 instead of $100,000). Realizing he’d been bamboozled, the investor gave the property owner his property back, but now the property owner owes an even larger mortgage than before, with the rescue company keeping most of the money. With everyone now totally confused on who owns the property and who owes what, the lawsuits are flying. Mom always taught me to walk away from deals I didn’t understand. When facing foreclosure, beware of anyone offering an easy escape and follow our foreclosure prevention tips instead.
Credit: Boston Globe article