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Fraudulent foreclosure "rescue" professionals use half-truths and outright lies to sell services that promise relief and then fail to deliver. Their goal is to make a quick profit through fees or mortgage payments they collect from the homeowner, but do not pass on to the lender. Foreclosure rescue firms use a variety of tactics to find homeowners in distress: Some sift through public foreclosure notices in newspapers and on the Internet or through public files at local government offices and then send personalized letters to homeowners. Others take a broader approach through ads on the Internet, on television or in the newspaper, posters on telephone poles, median strips and at bus stops or flyers or business cards at your front door. There are foreclosure prevention options, including reinstatement and forbearance, that are explained in "Mortgage Payments Sending You Reeling? Here's What to Do." a publication from the FTC.

The possibility of losing their homes to foreclosure can be terrifying for your customers. The reality that scam artists are preying on the vulnerability of desperate homeowners is equally frightening.

Fraudulent foreclosure "rescue" professionals use half-truths and outright lies to sell services that promise relief and then fail to deliver. Their goal is to make a quick profit through fees or mortgage pay- ments they collect from the home- owner, but do not pass on to the lender. Sometimes they assume ownership of the property by deceiv- ing the home- owner. Then, when it's too late to save the home, they take the property or siphon off the equity. The homeowners have lost their homes to foreclosure despite their best intentions.

How the scams work

Foreclosure rescue firms use a variety of tactics to find homeowners in distress: Some sift through public foreclosure notices in newspapers and on the Internet or through public files at local government offices and then send personalized letters to homeowners. Others take a broader approach through ads on the Internet, on television or in the newspaper, posters on telephone poles, median strips and at bus stops or flyers or business cards at your front door. The scam artists use simple and straight-forward messages, like:

* "Stop Foreclosure Now!"

* "We guarantee to stop your foreclosure."

* "Keep Your Home. We know your home is scheduled to be sold. No Problem!"

* "We have special relationships within many banks that can speed up case approvals."

* "We Can Save Your Home. Guaranteed. Free Consultation."

* "We stop foreclosures everyday. Our team of professionals can stop yours this week!"

Once they have your attention, they use a variety of tactics to get your money:

Phony counseling or phantom help

The scam artist claims that he can negotiate a deal with the lender to save the house if the homeowner pays a fee first. The homeowner may be told not to contact the lender, lawyer or credit counselor and to let the scam artist handle all the details. Once the fee is paid, the scam artist takes off with the money.

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Sometimes the scam artist insists that all mortgage payments be made directly to him while he negotiates with the lender. In this instance, the scammer may collect a few months of payments before disappearing.

Bait-and-switch

The homeowner thinks he is signing documents for a new loan to make the existing mortgage current. This is a trick: the homeowner signed documents that surrender the title of their house to the scam artist in exchange for a "rescue" loan.

Rent-to-buy scheme

The homeowner is told to surrender the title as part of a deal that allows him to remain in his home as a renter and to buy it back during the next few years. The homeowner may be told that surrendering the title will permit a borrower with a better credit rating to secure new financing - and prevent the loss of the home.

But the terms of these deals usually are so burdensome that buying back the home becomes impossible. The homeowner loses the home, and the scam artist walks off with all or most of the home's equity. Worse yet, when the new borrower defaults on the loan, the homeowner is evicted.

Bankruptcy foreclosure

The scam artist may promise to negotiate with the lender or to get refinancing on the homeowners' behalf if they pay a fee up front. Instead of contacting the lender or refinancing the loan, though, the scam artist pockets the fee and files a bankruptcy case in the homeowners' names - usually without their knowledge.

A bankruptcy filing often stops a home foreclosure, but only temporarily. What's more, the bankruptcy process is complicated, expensive and unforgiving. For example, if the homeowner fails to attend the first meeting with the creditors, the bankruptcy judge will dismiss the case and the foreclosure proceedings will continue.

If this happens, the homeowners could lose the money they paid to the scam artist as well as their home. Worse yet, a bankruptcy stays on their credit report for 10 years, and can make it difficult for them to obtain credit, buy a home, get life insurance or sometimes get a job.

Where to find legitimate help

There are foreclosure prevention options, including reinstatement and forbearance, that are explained in "Mortgage Payments Sending You Reeling? Here's What to Do," a publication from the FTC. Find it at www.ftc.gov.

They also may contact a credit counselor through the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates the national 24/7 toll-free hotline (1-888-995-HOPE) with free, bilingual, personalized assistance to help at-risk homeowners avoid foreclosure. HPF is a member of the HOPE NOW Alliance of mortgage servicers, mortgage market participants and counselors. More information about HOPE NOW is available at www.hopenow.com.

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