Homeowner Foreclosure Scams Spike

By Mike Colpitts

Homeowner foreclosure rescue scams surged nearly 60% in the first three months of the year following the introduction of new federal Rip-Off foreclosure prevention programs, according to a national non- profit group working to help homeowners at risk of losing their homes.

The Homeownership Preservation Foundation says fraudsters are busier than ever in the current depressed economy to take advantage of homeowners in default of their mortgages. The group offers a telephone hotline to aid troubled homeowners to report incidents of suspected fraud.

About half of the scams reported to the organization involve attorneys or individuals claiming to offer specialized “legal services” to halt foreclosure proceedings. Authorities say distressed homeowners should avoid any company or individual demanding upfront payments for assistance in avoiding foreclosure on their homes.

“Regretfully, every new government initiative spawns a slew of foreclosure avoidance scams, often from the same cast of characters doing business under various names to avoid easy detection and identification,” said foundation CEO Colleen Hernandez. “Most of these scams involve individuals supposedly offering mortgage foreclosure avoidance assistance that trained HPF counselors provide at no cost. Sadly, with most scams, no meaningful services are ever provided.”

The Federal Trade Commission (FTC) has investigated hundreds of foreclosure scams in the U.S. since the foreclosure crisis started more than six years ago. State authorities have also looked into hundreds of scams which typically collect charges in advance for promised foreclosure prevention services.

The HPF offers free counseling to help consumers avoid foreclosure in many circumstances or to work with their lenders to work out other solutions, including short sales and signing a deed in lie of foreclosure.

“Trained counselors can provide distressed homeowners with all the assistance they need to understand their options, prepare the necessary paperwork and negotiate with their mortgage servicers,” said Hernandez. “Anyone facing foreclosure should never pay upfront fees for these services.” HPF counselors may be reached at 888-995-HOPE.