With Nevada leading the nation in the rate of foreclosures, that states attorney general is cautioning consumers about an alarming incrase in foreclosure rescue scams.
Catherine Cortez Masto said that in nearly every case, these scam operations will promise to intercede with the homeowners lender to stave off foreclosure, but will require consumers to sign contracts which involve turning ownership of a home over to the foreclosure relief company.
The scammer then promises to lease the home back to the consumer with a buyback option at some future date. These plans never work, and consumers will lose their homes to the foreclosure rescue company.
Unfortunately, home foreclosures are on the rise in Nevada and that has given scam artists fertile ground for cheating those desperate to keep their homes, Masto said. If you are facing foreclosure, I encourage you to talk with your mortgage lender before accepting help from an outside party.
Nevada led the nation in foreclosures for the 11th month in a row, with one filing for every 152 househilds. Florida was second with one out of 282 homes and Ohio was third with one out of every 307 homes.
In one scam known to be operating in Nevada, Masto says the perpetrator solicits victims directly through the mail with promises to help a homeowner from foreclosure by saving their credit and negotiating directly with their lender.
The perpetrator will offer to buy the house for the total amount owing on the house, plus some small amount of cash. The perpetrator will require the victim to sign a deed, a transfer tax form, and a contract of sale.
The deed provides that the seller (the victim) is selling the house to a corporation. The perpetrator pays the cash to the victim and assures him he will take care of paying off any mortgages on the home.
After the victim moves out of the house, the perpetrator rents the house, does not pay the mortgages, and the house goes into foreclosure. The perpetrator can continue to collect rent until the foreclosure process is completed. The victim collects none of the rent, and, once foreclosure is completed, the renters are evicted.
What to do
Homeowners in distress must talk directly to their lender and not rely on a third party, Masto said. It's also important to make contact as early in the process as possible.
Assistance is also available from licensed credit counselors, government agencies, and legal services. But by all means, said Masto, seek advice from qualified professionals who do not have a personal interest in your decision.