How can you recognize a foreclosure rescue scam?

When you are having severe financial difficulties, possibly including the threat of foreclosure, in Connecticut, it can feel like you are drowning. An offer of help paying off your debts and preventing foreclosure may seem like a lifeline. Unfortunately, foreclosure rescue scams are prevalent, and those who run them are attempting to take advantage of your panic and desperation in order to make money off you. If you fall for one of these scams, you may end up in even worse financial trouble than you were in to begin with. 

People who run foreclosure rescue scams are adept at making the offer sound like the solution to all your problems, and it can be easy to fall for their tricks. However, if you keep a cool head and look out for warning signs that the deal may be too good to be true, you can avoid becoming a victim. 

According to Making Home Affordable, a joint effort between the U.S. Departments of Housing and Urban Development and the Treasury, one of the most blatant signs that a foreclosure rescue program may be a scam is if the organization charges you an upfront fee for its services. The government knows that you are already having difficulty making your mortgage payments and therefore makes it illegal to charge you advance fees for mortgage modification in most instances.

Do not trust any third party that claims to pre-approve or guarantee your application for a mortgage modification. Only your lender has the authority to do that. Be suspicious of any third party claiming to have direct contact with your mortgage lender. 

Be on the alert for communications that appear to be from your mortgage lender but ask you to send payments to an alternate location and/or contact. 

An offer of a HAMP modification is one of the most subtle warning signs. This was indeed once a legitimate federal program to help people modify their mortgages for a more affordable monthly payment. Unfortunately, the program closed as of December 31, 2017, and the government is no longer providing HAMP modifications. Therefore, anyone who offers you one is definitely running a scam. 

The information in this article is not intended as legal advice but provided for educational purposes only.