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Don’t fall for these foreclosure scams

Unexpected financial problems can hit anyone at any time. Even if you did your best to prepare for something like a big medical bill, house repairs or job loss, things can get out of hand pretty quickly. You understand that more than ever now that you are behind on your mortgage and facing foreclosure. But beware of foreclosure scams that seem to offer fail-proof solutions.

Foreclosure scams are sadly not all that new or uncommon. Scammers prey on vulnerable homeowners in New Jersey who are experiencing financial and even emotional distress at the thought of losing their homes. Their victims end up losing their homes anyway as well as money.

Keep your deed

In an equity skimming scam, a so-called buyer will approach you and offer to either pay off the mortgage while renting it out to you or to sell the property and share some of the resulting funds. If you agree, the scammer will have you sign the deed over to him or her. Ultimately, the scammer will not make any of the mortgage payments as promised. Instead, he or she will probably collect rent from you until the lender forecloses on the property.

In another scam, a scammer will act as a lender and offer to refinance your loan. However, the lender will tell you that signing over the deed first is the only way to prevent foreclosure. The scammer will then treat your property as his or her own and never come through with the refinancing. Like with the previous scam, the “lender” will treat you like a tenant. That person could even evict you if you fall behind on rent.

Pay attention to financial details

A lender who offers to refinance your mortgage might seem legitimate if the company does not ask you to deed over your property. Before saying yes to anything, carefully review the terms of the refinanced loan. Specifically, you want to watch out for balloon payments. Those lower monthly payments are probably because you are only paying the interest. When the loan term is up, the lender will ask for the entire remaining principal in one lump sum.

Counseling agencies may seem a lot more like the real deal, but be careful. There are many phony counseling agencies that prey on vulnerable homeowners by offering help — but at a cost. Asking for a fee upfront or for individual services is usually a red flag that something might be a scam.

Avoiding foreclosure

Understanding which scams to watch out for can protect your already strained financial situation. Simply avoiding things that will make your situation worse does not actually do anything to help though. You may be pleased to know that there are several legitimate options for saving your home.

Lenders are generally willing to work with homeowners who reach out about problems making their mortgage payments. Some may offer deferred payments while others might agree to renegotiate the terms of a loan. Navigating this process on your own can be confusing though, especially when you are already dealing with the financial strain of your current situation. If you are worried, do not hesitate to seek guidance from an experienced attorney who can walk you through this process.