2022 Boise Idaho Real Estate Blog

Avoid Foreclosure Schemes!!!

Main Boise Homes for Sale

Core Group Realty wants you to know what to watch out for if your are in a distressed situation.

As the housing bubble popped and the foreclosures flooded into the Boise Idaho real estate market and elsewhere, the unscrupulous reared their ugly heads to take advantage of the distressed homeowner.

With the past state of the economy, jobs were being lost and homeowners were falling behind with their house payment, which caused desperation and vulnerability amongst the homeowners. There is still a fair amount of this happening today.

As the anxiety and fear of being homeless sets in families are starting to turn to flyers, newspaper ads, and signage around their neighborhood advertising types of foreclosure rescue. The foreclosure rescue scammer approaches the homeowner with promises of paying off the delinquent mortgage and helping the homeowner stay in the property, but ends up causing more heartache and financial loss instead. The three most popular, unethical, foreclosure schemes are the “lease/payback” scheme, “bait and switch” scheme, and the foreclosure “specialist” scam.

One of the most popular foreclosure rescue schemes is the “lease/payback” scheme which offers short-term financing from a private investor. With this scheme, the homeowner is told they can stay in the home and pay a lower rent to the investor for up to five years instead of their original lender. The homeowner is swayed to transfer the title of their home to the investor as “collateral” as well as pay an upfront fee, with the promise of buying the house back after the five years are up. The typical end result of the “lease/payback” scheme is usually turmoil for the original homeowners. Once the deed is signed over to the investor, the investor has no legal obligation to keep the original homeowners as tenants in the home. The investor typically kicks the family out as soon as they get the upfront fee and the deed, and then either keep the home as an investment property or sell the home as quickly as possible for an amount that the original homeowner typically could not afford to buyback. The “lease/payback” scheme is not the only foreclosure rescue scheme out there; it is just one of the more popular ones.

Another popular foreclosure rescue scheme is known as the “bait and switch” scheme. In the “bait and switch” scheme, the scam artist searches through the public notices of the local newspapers to find homeowners that are delinquent with their mortgage payments. They target these homeowners and persuade them to sign documents that transfer the deed to the scam artist. Although, the homeowner is told by the scammer that the documents are in fact “refinance” loan documents and they will be refinancing their mortgage into a lower rate/lower payment loan. The “bait and switch” scam artist counts on the distressed homeowner to never read the fine print of the documents and ends up walking away with the deed to the house in question, leaving the homeowner homeless and out thousands of dollars.

There are multitudes of foreclosure “specialists,” known as the “phantom help” scammers, which are seeking out unsuspecting, fraught homeowners. These “foreclosure specialists” present him or herself as someone who is able to counsel the homeowner out of foreclosure. They charge an astronomical amount of fees for their “services,” and make outstanding promises to the homeowner that they are not able to fulfill. The “foreclosure specialist” performs a minuscule amount of paperwork or makes a few phone calls that the homeowner could have completed easily his or herself. The homeowner typically ends up wasting their money and valuable time, while their home was continuing to dive deeper in the foreclosure process, and now is even harder for the homeowner to recover.

If a homeowner is falling behind on their mortgage payments and finding themselves in the stages of pre-foreclosure they should be careful when seeking out help. There are many non-profits agencies that are willing to help with the foreclosure process, as well as community organizations and real estate professionals willing to provide the distressed homeowner with honest information. The homeowner can also choose to short sell their home if they cannot afford to make their mortgage payments, which is often more lenient on their credit report/scores. There will always be unethical individuals out there, it is the job of the responsible homeowner to carefully look into everything he or she signs and make sure to never sign over their deeds to “foreclosure rescue companies.” The same old cliché works perfectly in these scenarios, “If it sounds too good to be true, it is.” 

"FIU Case Study: Foreclosure Rescue Scheme with an Investment Property Scheme - Freddie Mac." Freddie Mac Home. Web. 04 May 2011
"Most Common Types of Scams." Prevent Loan Scams - A Project of the Lawyers Committee for Civil Rights Under the Law Prevent Loan Scams - A Project of the Lawyers Committee for Civil Rights Under the Law. Web. 04 May 2011
"The Foreclosure "Rescue" Racket." Businessweek - Business News, Stock Market & Financial Advice. Web. 04 May 2011
U.S. Trustee Program. "Frequently Asked Questions: Consumer Information." Welcome to the United States Department of Justice. Web. 04 May 2011
"YouTube - Real People, Real Stories: Avoid Foreclosure Rescue Scams." YouTube - Broadcast Yourself. Web. 04 May 2011

Posted by JessicaD at 11/30/2012 5:57:00 PM

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