More than 1 million homeowners have seen their homes go into foreclosure in 2007 and there will be even more in 2008 and 2009. With the increase in foreclosures, "foreclosure rescue" scams are also on the rise.
I hate to see that disadvantaged people are being taken advantage of by a bunch of foreclosure rescue scammers. Unfortunately, the few con artists out there are giving ALL foreclosure rescuers a bad name and ruining things, not only for the honest real estate investors, but for the homeowners and lenders as well.
As a result of the few bad apples, there are even some states, such as Massachusetts, that have banned foreclosure rescue activities. This is going to far. There are legitimate foreclosure rescuers, usually real estate investors, that provide a great service to people in foreclosure.
The big number one is that an honest foreclosure rescuer can help a distressed seller with avoiding foreclosure altogether or making it less painful. Remember, that if a homeowner can avoid foreclosure, the lender also saves huge amounts of money. Foreclosure rescuers can help with..
Forbearance: Your lender may offer a temporary reduction or suspension of your mortgage payments while you get back on your feet. Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments.
Loan modification: This is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable.
Reinstatement: Your lender may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. This is often combined with forbearance when you can show that funds from a bonus, tax refund, or other source will become available at a specific time in the future. Be aware that there may be late fees and other costs associated with a reinstatement plan.
Repayment Plan: This is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.
And just how do you tell an honest foreclosure rescuer from a scammer?
The first thing you should do is ask them for three references of other homeowners they have helped. This alone will send many of the foreclosure scammers running. Secondly, tell them that you will be having your attorney review everything they suggest to you or try to get you to sign. Common sense isn't it?