BBB warns of foreclosure-rescue scams

DENVER – The Better Business Bureau is warning mortgage holders of foreclosure-rescue and loan-modification scams that are becoming more prevalent in the Denver metro area.

The two scams are advance-fee loan modification schemes and sales-leaseback schemes, with advance-fee schemes being the most common.

The BBB has warned about advance-fee loans in the past and theses scammers prey on anyone who is in debt but especially the most desperate. In a foreclosure situation, someone charges you a fee in advance to negotiate a deal with your mortgage lender. They may even offer a money-back guarantee. In the scam, the outcome is that they take your money (the average is about $3,000), provide little or no service and then refuse to refund the fee.

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In a sales-leaseback scheme, the scammer persuades you to transfer your deed to them by offering to assume your payments and let you pay rent while you get your affairs in order. They promise to sell the property back to you once your financial situation improves, but, of course, they don’t. Often they take out another loan on the home or even sell it out from under you.

Here are some “red flags” that at-risk homeowners should watch out for when looking for foreclosure help, courtesy of the Federal Trade Commission. You should avoid any business that:

Guarantees to stop the foreclosure process – no matter what your circumstances.

Instructs you not to contact your lender, lawyer, or credit or housing counselor.

Collects a fee before providing you with any services.

Accepts payment only by cashier’s check or wire transfer.

Encourages you to lease your home so you can buy it back over time.

Tells you to make your mortgage payments directly to it, rather than your lender.

Tells you to transfer your property deed or title to it.

Offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale.

Offers to fill out paperwork for you.

Pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.

According to the Mortgage Bankers Association, the number of homeowners potentially facing foreclosure in the U.S. is at 2.7 million.