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Daily Real Estate News  |  September 17, 2009  |   How to Spot Foreclosure-Prevention Scammers
Here’s how the most common foreclosure-prevention scams work:

The desperate home owner gets a letter that says something like, “We know you’re having a hard time. We have a pipeline to your lender and can help you save your home. Call this toll-free number now.”

Home owners call the number and agree to pay $1,200 to $1,500 upfront for help with their mortgage. Nothing happens. Their home still goes into foreclosure.

Harold Kirtz, a lawyer for the Federal Trade Commission who is prosecuting these scammers, says victims are often well educated and financially savvy, but they also are “in a very vulnerable state.”

Here are some red flags that should make a home owner run in the opposite direction:
  • If the company guarantees success. Nobody can guarantee a lender won’t foreclose or will modify a loan.
  • If the company wants money upfront. "We can't say all advance fees are illegal," Kirtz says, “But in most cases they're probably bogus."
  • If the company wants the home owner to send mortgage checks directly to the modification firm. The only certainty there is that the company will cash the checks.

Source: Washington Post Writers Group, Kenneth R. Harney (09/13/2009)

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