October 1st, 2008 by Reed Allmand 
Facing the prospect of losing a home to foreclosure can put the best of us under extreme stress and pressure, causing us to grasp at any straw to save our biggest investment. That’s why with the rise in foreclosures, one of the fastest growing scams in Texas targeting distressed homeowners is the "foreclosure rescue" scam.
How It Works
Scammers target homeowners with equity in their homes who are facing foreclosure. The scam comes in several strips.
- Fake Counseling – The scammer offers useless counseling on how to save your home for a fee, which they pocket. This scam may also require you to give the scammer your mortgage payments while they negotiate with the lender. The payments never make it to the lender and the scammer disappears.
- Bait & Switch – This scam involves you signing your home’s title over to the scammer under the guise of receiving a "rescue loan."
- Rent-To-Buy Scam – The scammer convinces the homeowner to sign over the title of their home to the "foreclosure rescue" company under the pretense that the original owner can eventually buy the home back after paying the scammer rent for a few years. Unfortunately this doesn’t happen as the scammer raises the rent and eventually evicts the original owner and sells the house, pocketing the profits.
- Bankruptcy Scam – The scammer charges the homeowner a fee for negotiating with the lender or getting refinancing. The scammer never speaks with the lender, instead they pocket the fee and secretly file bankruptcy under the homeowner’s name, which will temporarily stop the foreclosure. But if the homeowner does not show up to the bankruptcy hearings (because he/she doesn’t know about them) the case could be dismissed and the home could go into foreclosure anyway.
The best way to avoid becoming a victim of these scams is to have an attorney review any documents before you sign them.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
View all posts by Reed AllmandSubscribe
Subscribe to our e-mail newsletter to receive updates.
