When people are desperate, they are not thinking clearly and can fall prey to vultures who exploit vulnerabilities. With so many foreclosures happening these days, fraudsters are coming out of the woodwork using new and old tricks.

Foreclosure Prevention Schemes – Homeowners facing the threat of foreclosure and nearing eviction are contacted by “foreclosure specialists” who promise to work out their mortgage problems by:

1. Buying their home by signing over the title.
2. Homeowner makes monthly payments to fraudster.
3. Letting them live in their home until they are “back on their feet”
4. After the homeowner is back on their feet, they can “repurchase” the home.

Of course, you’d be right if you’re guessing that onc ethe homeowner signs over the title to their home, the fraudster then sells the home and the new owners evict the former homeowners. You might be asking yourself, “what if the home is upside down in value (the mortgage is more than the home is worth)?” The fraudster makes the home appear completely paid off by filing a false lien release with the county recorder. Don’t think this happens? I just heard about a case like this last week in my home town of Phoenix.

Elderly and Immigrant Identity Fraud — In this predatory practice, fraudsters steal the identity of the elderly by duping them into applying for reverse mortgages. In the same way, non English-speaking consumers are tricked into providing identity information. In both cases, the identities are used to purchase and sell property or make loans benefiting the fraudsters. A simple inquiry about a loan product that leverages investment or rental properties can be enough to obtain information for use on fabricated loan transactions.

Loan Restructuring These guys say they can restructure your mortgage, lower your payment and even the mortgage principal. Before the Obama administration launched its “Making Home Affordable Program”, the only loan restructuring going on was when a homeowner refinanced their home with a conventional or FHA loan.   In order to refinance a homeowner needs equity, afford the payments, and have good credit, factors which are absent in many close-to-foreclosure homeowners.

Don’t fall for these schemes.  You can do a loan restructuring on your own by merely calling your mortgage company. The details are here. If you don’t qualify for the “Making Homes Affordable” program, you are not going to have your problems fixed by someone promising to do your loan restructure for you. My spam filter is still filled with companies promising to do loan restructuring – beware. Here’s how to spot a scam:

• The company promises they can reduce your principal
• The company says that they can still do a loan restructure for you even though you’ve been turned down to participate in the “Making Homes Affordable” program by your mortgage company.
• The company demands payment upfront.

If you know of any other type of mortgage fraud, leave a comment to help warn others.

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