Foreclosure rescue scams are one of the notable side effects of the ongoing foreclosure crisis in New York and across the U.S..
Companies seem to spring up everywhere offering to assist you with your foreclosure problems and promising you that if you work with them you can avoid foreclosure. By and large, these are not very legitimate operations. Many of them get busted by the authorities, though they frequently spring up again with new names.
Foreclosure rescue scams can be avoided, here are four danger signs to watch out for:
1. How long have they been in business under the same name? If a company has not been around for at least a few years or has changed it’s name recently, those are red flags. Of course, just because they have been around for a few years doesn’t mean they’re still not running a scam. But if they’re short-timers, then you can definitely cross those off the list of places you want to do business with.
2. Many foreclosure rescue companies will tell you to stop paying your mortgage and that they’ll take care of things. That’s bad advice. Not paying your mortgage is potentially the quickest way to get into foreclosure. And the foreclosure crisis landscape is littered with homeowners who followed this kind of bad advice. If you’re not working with a lawyer, then your strategic options are limited and you won’t be able to use the legal process to help stop or delay foreclosure. Your only options without a lawyer are to sell your home or negotiate a “deed in lieu of foreclosure” arrangement with the bank.
3. Foreclosure rescue companies may offer to negotiate a mortgage modification for you. What they don’t tell you is that you can do it yourself. You don’t need them. Of course, if you’re worried that it’s too complicated to deal with on your own, then you should be working with an experienced attorney. An attorney gives you access to legal options that a foreclosure rescue company cannot offer. And that leverage is potentially very helpful in your negotiations. Plus, there’s little regulation of foreclosure rescue companies, so you really don’t know what you’re getting when you rely on one to negotiate on your behalf. By contrast, the bar association has significant oversight of bankruptcy lawyers.
4. NEVER pay a fee up-front to a foreclosure rescue company or, for that matter, to any debt relief or debt consolidation operation. If any non-attorney is asking for an up-front fee, odds are it’s a scam. Even if it’s not, these kinds of places frequently lose incentive to help you once you’ve paid them. (Attorneys are in a different situation because they need payment in advance to file your bankruptcy case.)
Foreclosure rescue scams take advantage of unsuspecting homeowners. If you have questions about foreclosure or are worried about whether a particular service is legitimate, please feel free to contact our Brooklyn bankruptcy law office for a free initial consultation.