When faced with foreclosure, it's natural to want to do everything in your power to prevent it from happening. This leads to many well-meaning people to fall prey to foreclosure scams, which promise homeowners help that never actually materializes. Being able to identify these scams is a must to prevent you from throwing your money away. In this case, PennyMac offers the following advice.
The first step is to understand how some of the most common scams work. You may be contacted by an individual who claims to have a strong relationship with your lender. After providing this person an upfront fee, and possibly a few mortgage payments, he or she will claim to be negotiating on your behalf to get a lower mortgage payment. In some cases, homeowners are even instructed to cease making mortgage payments until negotiations are complete. This leads to even more issues and might speed up the foreclosure process.
Other scams artists offer a new loan, which is supposed to include more favorable terms. However, loan documents may actually be a title exchange in disguise, which means you've transferred the property to another person. You may also be invited to sell the property to a third party, who will let you rent the home until you're able to buy it back. In this instance, the terms of the agreement are such that it's impossible to buy back your home or even continue making rent payments.
So how can you steer clear of these scams? Firstly, you should never provide an upfront fee for foreclosure help. In many cases, these services are available to the public for free. If you do pay for a service, you shouldn't have to put down an exorbitant deposit to get started. Also, any person that tells you to stop making payment is not providing sound advice. If you're concerned about foreclosure, it's best to consult with an attorney, who will be able to guide you to make the best choice.