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Don’t be Duped by Real Estate Loan Scams

Friday, May 1, 2009 posted by Tommi Crow

In a bad economy, housing con’s, scams and fraud are on the rise.   The increase in real estate related scams is up so much this year that the Obama administration is involved, and promises “We will shut down fraudulent companies more quickly”.

Here are some of the most common scams seen in the housing industry and tips about how to protect yourself and your family.

Promise to Stall or Halt Foreclosure

Foreclosure scammers are the worst of the worst.  Like vultures, they swope down to pick at the flesh and bones of weak and vulnerable.   These companies promise to stall, avert or stop the foreclosure process.  Many families which are facing the loss of their homes interupt their “pitch” as an answered prayer.   Don’t Fall for It. 

Homeowner’s can identify these companies because they always ask for an upfront fee for their service.   In addition to losing thousands of dollars to these con men, the victims also waste precious time in working with their lenders, which means that this scam can actually speed up the foreclosure process.

Homeowner’s are advised to check with the Better Business Bureau, their lender and the Hope Now organization, before doing business with any company promising the stop a Foreclosure.  

Loan Modificiation

The state of California issued permits to real estate agents for loan modifications.  The state now has almost 600 Realtors, so far, that can collect upfront fee’s for negotiating loan modifications and short sales with lenders on behalf of the homeowner.

We have heard reports that some of these companies charge $2500-$3000 to negotiate with lenders, saying they provide more service and expertise than overworked non-profits do.

Consumers should ALWAYS be on High Alert if they are ask to pay upfront fee’s to anyone, especially when the service provider can not guarantee results.   There are a lot of starving real estate agents out there, so beware and always verify credentials before paying for any upfront service.

Where to go for Real Help.

  1. Homeowner Preservation Foundation.  1-888-995-4673 
  2. Hope Now    Website Link
  3. Making Home Affordable. gov   Website Link
  4. Your Lender
  5. Beware:  Don’t be fooled into working with companies because they have official sounding names and copy cat websites.  The government recently shut down 5 companies and issued warning letters to 71 others who are operating under names that sound legit, but aren’t. 

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