If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a housing counselor.
FORECLOSURE ALERT – Homeowners: Be Informed About Foreclosure Consulting Services
Las Vegas — The Nevada Division of Mortgage Lending and the Consumer Affairs Division are warning homeowners to be cautious when contracting with companies representing themselves as “foreclosure consultants”. While many of these providers are legitimate, many are not and may charge hundreds of dollars up front to negotiate with a lender on behalf of the homeowner, often without success.
“There are laws prohibiting fees being charged up front for foreclosure assistance,” says Mortgage Lending Commissioner Joe Waltuch. According to NRS 645F.400, foreclosure consultants cannot charge a fee before they have performed the services you’ve contracted for.
“It’s important to remember, however, that those laws only take affect when the home has officially been placed in the lender’s foreclosure cycle,” continued Commissioner Waltuch. “Depending on the services offered, the foreclosure consultant may also need to be registered with the Nevada Consumer Affairs Division under the Credit Service Organization law.”
According to NRS 598.741, companies providing “counseling or assistance to a person in establishing State of Nevada or effecting a plan for the payment of his indebtedness” must be registered with Consumer Affairs. “Before signing any contracts, check with Consumer Affairs to determine if the company is registered,” says Consumer Affairs Commissioner James Campos. “It also helps to check with the Better Business Bureau for complaints and to research the company on the Internet to see what experiences other consumers have had.”
Adds Commissioner Waltuch, “Be careful when using the Internet to find these types of companies. There are many out-of-state companies, and some lawyers, who claim they can help you. Make sure they are legitimate businesses, properly licensed to operate in Nevada.”
Consumers may also receive foreclosure assistance, including loan modification help, by working with a qualified housing counselor. Legitimate foreclosure consulting agencies are generally nonprofits that never charge an up-front fee and are usually free. Visit http://foreclosurehelp.nv.gov/HousingCounselors.html for a list of qualified Nevada housing counselors.
If you think you have been victimized by an unscrupulous foreclosure consultant, file a complaint with Consumer Affairs at http://www.fyiconsumer.org/Forms/ComplaintFormLV.pdf. For more information about foreclosure scams, visit the Foreclosure Help Website at http://foreclosurehelp.nv.gov/ForeclosureScams.html.
In addition, Commissioner Campos encourages consumers to visit the Fight Fraud Website at http://fightfraud.nv.gov/. “The site includes extensive tips on how to prevent fraud and provides downloadable complaint forms to help you respond effectively if you become a victim,” says Campos. “Visit it regularly for the latest fraud alerts.”
If your property mortgage is delinquent and you are facing foreclosure, you may be contacted by a person or company willing to take the property off your hands to save your credit. While some of these companies are actually good and do help, others are not.
- Do not sign anything that you do not understand or that is blank. Go through a reputable escrow company to make sure that your mortgage(s) is paid off to the satisfaction of the lender(s). If you do not do this, you may find that the person or company has title to or owns your property, yet the mortgage is still in your name. The person or company pays nothing to the mortgage(s) holder. The foreclosure happens. Your credit is ruined while the company “saving” your credit has made money from your property by renting it until the foreclosure.
If you think you’ve been a victim of this fraud, contact Nevada Consumer Affairs Division at (702) 486-7355 or (775) 688-1800.
Common Foreclosure Scams
Equity skimming: A “buyer” approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The “buyer” may suggest that you move out quickly and deed the property to him or her. The “buyer” then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember, signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.
Phantom help: The “rescuer” charges outrageous fees for light-duty phone calls or paperwork that the homeowner could easily do, none of which results in saving the home. This predatory scam gives homeowners a false sense of hope and prevents them from seeking qualified help.
The bailout: In this scam, the homeowner is deceived into signing over title with the belief that he will be able to remain in the house as a renter and eventually buy it back over time. The terms of these scams are so onerous that the buy-back becomes impossible, the homeowner loses possession and the “rescuer” walks off with most or all of the equity.
The bait-and-switch: In this scam, the homeowners think they are signing documents to bring the mortgage current, but instead actually surrender their ownership. They usually don’t even know they’ve been scammed until they’re evicted.
Phony counseling agencies. Some groups calling themselves “counseling agencies” may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale.
7 Ways to Avoid Foreclosure Scams
Follow these tips from the National Consumer Law Center.
- Don’t panic. Get detailed information about the deadlines you face in resolving your problems. Pay special attention to the date on which you would lose legal right to ownership.
- Never sign a contract under pressure. Take your time, and consult a lawyer if possible.
- Never sign away ownership via a quitclaim deed or other means without consulting a lawyer. Be especially suspicious of offers to lease back your home, in order to buy it back over time. These offers are weighted against you.
- Never make your mortgage payments to anyone other than your lender. If you can’t pay, do not ignore warning letters from your lender; contact them instead.
- Beware of any home-sale contract in which you are not formally released from liability for your mortgage. Make sure you know the rights you are giving up and that you agree to give them up.
- Don’t sign anything with blank lines or spaces; information could be added later without your knowledge and consent.
- If you do not speak English, never use a “rescuer’s” translator. Instead, insist on using your own translator.
Source: http://www.hud.gov/foreclosure/index.cfm, http://www.bankrate.com/brm/news/mortgages/20050728a1.asp, and the NationalConsumerLawCenter