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Oscar Dominguez: Homeowners should be wary of foreclosures rescue scams

Posted: June 12, 2009 9:21 p.m.
Updated: June 13, 2009 4:55 a.m.
 

As many homeowners struggle to maintain their home mortgages in this challenging economy, scam artists have developed a number of schemes to con unsuspecting homeowners out of their money - and their homes.

According to the U.S. Department of Justice, the FBI is investigating more than 2,100 mortgage fraud cases, up almost 400 percent from five years ago.

In fact, the bureau has more than doubled the number of agents investigating mortgage scams.

Many con artists are exploiting distressed homeowners with a variety of strategies that give homeowners the false promise of saving their homes.

Initially, con artists may get your attention with simple messages like, "Stop Foreclosure Now," or "We guarantee to stop your foreclosure," by sending personalized letters, flyers, business cards or reaching you through ads, according to the Federal Trade Commission (FTC).

Their scams range from a phony offer to negotiate terms with your lender for an upfront fee, which the scam artist steals, to persuading you to sign documents for a new loan to make your existing loan current.

Instead, the scam artist may take the title of your home, according to the FTC.

Other schemes the FTC warns about include a "rent-to-buy" scheme in which you make a deal to sign the title of your home over to a borrower with a better credit rating to secure new financing and avoid foreclosure.

The intention is to remain in the home as a renter until you can re-purchase it down the road. In this case, the new borrower can take the equity out of the home and default on the loan.

Fraudsters have also used this type of scam to transfer the title of the home and hike the rent. The rent is raised so high that the former homeowner can't afford to pay and is evicted. Then, the con artist sells the home.

Recently, California Attorney General Edmund G. Brown, Jr. cautioned about a scam in which con artists resorted to forging the letterhead of major lenders to pilfer thousands of dollars from Californians for nonexistent loan-modification services.

The scam involved fraudsters mailing flyers that appeared to be from a government entity, or the homeowners' lenders, featuring the words "Final Notice" in bold letters and letting homeowners know they qualify for a bogus program to avoid foreclosure.

Upon providing their mortgage information, victims would receive a fake "confirmation" letter about their lender being notified about the loan modification, and in many cases, homeowners received forged loan modification documents.

Victims were notified their mortgage payments would be submitted to the "payment processing department" and sent to a post-office-box address. However, the money victims sent was not applied to their mortgage loans.

If you are at risk of foreclosure, consider contacting HOPE NOW, an alliance of mortgage servicers, mortgage market participants and counselors at www.hopenow.com.

For more information about avoiding foreclosure rescue scams, you may also visit the California Attorney General's office at www.ag.ca.gov or the Federal Trade Commission at www.ftc.gov.

Oscar Dominguez is vice president and branch manager of the Stevenson Ranch branch of Union Bank, located at 25954 The Old Road and the Valencia Bank & Trust branch, located at 23620 Lyons Avenue. His column reflects his own views and not necessarily those of The Signal.

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