FHA foreclosure scams are becoming commonplace with the rising number of foreclosed homes on the market and desperate families who need a home. But you can avoid these FHA foreclosure scams with a little advice.
Too often there are deals announced that seem to be too good to be true, and they usually are. In today's tough market, many people are looking to cash in on the cheap real estate before the economy rebounds. However, those signs for 'We Buy Houses' are not as amazing as they might seem. After all, when it sounds too good to be true, it's usually a FHA foreclosure scam. Here's what you need to know.
If you're having troubles paying off your mortgage, you need to go to your bank or to the FHA lender in order to renegotiate your terms. Some con artists will offer to help you with this sort of service, charging you a fee for something you could easily do on your own. Or the con artist might tell you that they were successful in negotiating a new mortgage payment, but then ask you to pay them instead of the lender. And then they are never heard from again.
Another frequent scam is one in which a con artist offers to take your home's title and then someone else will allow you to rent your home instead of paying the mortgage. This will reduce your fee, they say, and you can always take your title back when things improve. However, when you hand over your title to someone else, they can use the home equity in order to get a loan or they can suddenly change you far more rent than you can afford. Some will even raise the purchase price of your house, making it impossible for you to buy your own home back.
Here is an A&E "Flip This House" foreclosure scam that was shown to viewers. This information was provided by a local Fox news affiliate in Atlanta.
Other scammers will tell you that if you move out of your house, then they will look for a buyer. All you need to do is to hand over your title and then when the house sells, you will both split the profits. However, then the scammer rents the house out while you stop paying your mortgage payments. Your home then goes into foreclosure and your credit rating drops.
The scam many people are falling for with their FHA foreclosed home or with another type of homeowner situation is that a scammer will offer to rework their mortgage for the homeowner for a fee. However, they don't do anything to change your loan even though you might think they did and start paying less than you were supposed to with your original mortgage agreement.
But you can avoid FHA foreclosure scams quite easily with a little thought and a little more common sense. First of all, if something sounds too good to be true, assume that it is. No one is giving something away for free. Second, if the 'help' you find doesn't want you to take your papers to a lawyer for review, then that might be a sign they aren't being honest with you. You should also never pay your mortgage to anyone but your bank or other FHA insured lender. Up front fees are another sign of a scam as you should only pay fees when someone does something for you, but not before they complete the tasks they say they will do.
You should also never be asked to transfer your title to someone aside from the bankor other lender. A person who only wants you to talk to them and to pay them via cash or cashier's check might also be a scam artist. Finally, anyone that advertises their services with a handmade flyer or that pressures you into signing up with them is also probably just trying to get your money.
Here is an A&E "Flip This House" foreclosure scam part 2.