Texas Consumers – Beware of Foreclosure Rescue Scams

With last week’s announcement of a new federal plan to help homeowners avoid foreclosure, Texas Attorney General Greg Abbott has issued a Consumer Alert: Foreclosure Rescue Scams Growing Threat to Consumers.  He advises Texans to be especially alert to foreclosure rescue scams, and should keep in mind that there is no charge to participate in the federal program.

Legitimate and illegitimate foreclosure rescue companies offer to help homeowners avoid foreclosure.  But some fail to provide the services promised.  And worse, they take homeowners’ money, ruin victims’ credit, and wipe out the hard-earned equity that owners have built up in their homes.

Foreclosure rescue fraud scams have been around for years.  Unfortunately, as the mortgage crisis continues and more Texans default on their loans, foreclosure rescue fraud scams have become more common.  Foreclosure rescue scams prey upon homeowners who are behind on their mortgages and face foreclosure. These fraudulent businesses market themselves as “foreclosure consultants” or “mortgage consultants” or “foreclosure service” or “foreclosure rescue agency.”

The typical foreclosure rescue agency attempts to convince homeowners to pay large fees to the agency.  Then they advise consumers to cease all communication with their mortgage lender and tell the consumer that it is because of the agency’s relationship with the mortgage company that they can save their home from foreclosure.  Instead, the agency takes the consumer’s money and does nothing. NOTHING!  Meanwhile, the homeowner’s failure to communicate with the mortgage company and failure to take any action concerning their delinquency causes the homeowner to get further behind on his or her loan.

According to the AG’s office, some homeowners have entered into complicated written agreements with the foreclosure rescue agency only to discover that they unknowingly sold their home for a fraction of its value.  The AG’s office advises homeowners NOT to sign any paperwork they don’t thoroughly understand.    Also, homeowners should be wary of outrageoud or unreasonable promises from these companies and they should learn more about the company before signing anything.  Check out the Better Business Bureau for any complaints.  Do a search on the Internet.

While there are some legitimate companies out there, during my 17 years of practice, I have yet to see one.  If you believe you have been contacted or victimized by a foreclosure rescue  service, you can file a complaint with the OAG at (800) 252-8011 or online at www.texasattorneygeneral.gov.

Related posts:

1. Beware of Mortgage Foreclosure Rescue and other Scams
2. Excel Loss Mitigation & United Servicing charged with fraudulent foreclosure rescue scam in Texas
3. Mortgage Foreclosure “Rescue” Service Settles FTC Unfair Trade Practices Lawsuit for $1.2 Million