One of the types of scams that the government is attempting to crack down on is foreclosure consultants offering bogus loan modification services to homeowners facing the loss of their homes. While the government is providing its own modification programs, it is also going after a number of fraudulent schemes that have been used to trick borrowers.

There are a large number of scams that target foreclosure victims, but the loan modification one may be the easiest for the criminals to engage in. The general way it works is that borrowers pay hundreds or thousands of dollars for the services of a loss mitigation company. After signing the agreement and taking the payment, however, the company provides almost no services, resulting in the homeowners losing the property.

Many mortgage modification scams are almost entirely made up of borrowers paying money to a company which then sits on the cash, performs almost no services, and simply disappears or denies giving a refund after the house is auctioned. There are hundreds of complaints about such companies, and it seems as if the attorney general of one state or another shuts down a new one every week.

However, there are some variations on the theme, as well. For instance, some loss mitigation companies will take homeowner money and obtain an unaffordable modification program, even if there is a chance to negotiate with the lender for a more beneficial arrangement. The company obtains the first, easiest modification possible, presents it to the borrowers, and declares its work done. Unfortunately, though, an unaffordable plan will not help homeowners remain in their houses.

Another variation on the scheme is simply to charge homeowners to attend loan modification seminars. This may be as part of a larger program to help them negotiate for better loan terms, although the seminars can cost upwards of several thousand dollars. If the borrowers do not attend the seminar, they will not receive help from the foreclosure scam company, which will blame the failure on the homeowners.

A final scam related to loan modifications that is being discovered more often is companies charging for loan audits that are performed by someone other than an attorney. Information provided in these audits is also often useless, as the claims that the homeowners are encouraged to raise are barred by the expiration of the statute of limitations for that particular argument. For thousands of dollars, borrowers are told what will not work in defending their properties.

Unfortunately, many homeowners are taken in by these and similar scams every day. States are most often behind in prosecuting and shutting down these companies because there are simply so many of them, and the dollar amounts they steal from borrowers are relatively small. Thus, it is up to the homeowners themselves to make sure they are dealing with a trustworthy company or individual who is offering them foreclosure help or negotiation services in the pursuit of a loan modification or other workout option.

When foreclosure happens, many homeowners simply go into hiding for months at a time. A few weeks before the property is auctioned off by the county, they decide to look into options to save the home. But by this time, unfortunately, it may be far too late, or the only good option presented to the borrowers comes from a foreclosure rescue scam. In the end, the borrowers lose even more money.

Thus, it is almost always better to begin fighting foreclosure as early in the process as possible. Even before they have missed a monthly payment, homeowners should contact the bank and inform it of any pending financial hardship. Forbearance plans may be available to lower the mortgage bill, while other monthly expenses can also be negotiated down or eliminated completely. Timing is the most important factor in preventing foreclosure.

But for the borrowers who are already in foreclosure, the further along in the process it gets, the fewer options will be available. A repayment plan may be feasible if only a few payments are missed, but can be too expensive otherwise. A loan modification may be an option early in the delinquency, but after numerous payments have gone delinquent, the chances of obtaining an affordable plan begin to drop dramatically.

Even defending the foreclosure in court presents problems for the homeowners. What, exactly, are they looking for from the court process? If the goal is to save the home, any defense should take into account a reasonable solution to foreclosure that will give the homeowners an affordable payment. Without an affordable payment plan, there is little reason to attempt to keep the property.

This is the case for homeowners defending a foreclosure case or attempting to fight a foreclosure scam company. If there is no reasonable plan to save the home and make payments to the appropriate party, then there is little reason to attempt to hold onto it. There are other goals that may be pursued in the courts in order to fight a wrongful foreclosure or hold a scam operation accountable.

Another reason to bring such a case into court is for the homeowners to obtain money they lost due to a breach of some duty or violation of a law by the lender, servicer, or foreclosure rescue operation. Money damages may be awarded for such violations, and money and equity lost due to a scam can often be won through a judgment in the courts. Numerous courts have awarded homeowners significant damages from foreclosure scams.

Finally, another good reason to resolve foreclosure issues in court is to deter abuse and fraud. Companies that take advantage of homeowners by providing false or blank documents or changing terms at the last second without the borrowers' knowledge should be taken out of business. While the courts are not always the best forum in which to hold banks or politically-connected companies accountable, they do offer one more option for homeowners.

It is vitally important for homeowners to keep in mind their goals when they defend a foreclosure in court or bring a case against a lender or scam company. Without doing this, they can find themselves back in a bad situation, agreeing to make payments on a plan that they simply can not afford. This is another reason borrowers should carefully evaluate their financial situations before moving ahead with any plan to stop foreclosure.

When homeowners begin to fall behind on their mortgage, almost immediately, the bank begins adding numerous fees to the balance. A default of a couple months can balloon into a total amount behind equaling nearly half a year's worth of principal and interest payments. This is a result of the lender or servicing company adding as many and as high of fees as they can get away with by law.

But for the borrowers who are trying to get back on track with their loan payments, it can be almost impossible to determine how much money is actually owed. One reason for this is simply that lenders do a terrible job keeping records and accurate calculations of these fees. But another important cause for the confusion in fees is that servicing companies and their lawyers just make them up as they go along.

Late fees are almost always charged as soon as the grace period expires on a monthly payment. However, the amount of the charge is limited by several factors, including the following:

• The date on which the fee can be charged to the account
• The dollar amount of the fee charged
• The percentage of payment allowed to be assessed as a fee
• The amount of the monthly payment on which the fee can be charged
• The event which triggers the imposition of the late fee

There are also a number of other factors which can affect how late fees are charged to borrowers. If the loan documents and state law allow for different late fees, it is often the maximum allowed by state law that can be used by the lender. However, the company may charge the higher amount allowed in the contract, and it will be up to the borrowers to fight this later on and have the fees reduced.

Also, if the state laws allowed for a certain percentage (for example, 5%) to be charged as a late fee when the contract was written, what happens if the laws are later changed? If the law later allows only a 4% maximum late fee, there are two potential limits that apply to the account if the borrowers default during the period state laws allow only 4% to be charged. In these cases, courts have decided that the limit allowed at the time the contract was executed is to be applied.

One practice that servicing companies may engage is but which is prohibited by law is pyramiding of late fees. New regulations will outright prohibit this action again, but laws and the courts have yet to stop crooked mortgage servicers from preying upon borrowers.

Pyramiding late fees refers to applying payments first to late fees and past due amounts, and then charging additional late fees on the current payment. This action results in late fees and interest being applied to an account over and over again, despite previous late fees having been assessed on a particular payment already. According to the Federal Trade Commission, pyramiding of late fees is unfair to consumers.

Of course, despite the fact that the FTC regards pyramiding of late fees as an unfair act, another government agency, Fannie Mae, specifically authorizes servicers to engage in the activity. However, the Fannie Mae guidelines that authorize the lender to "hold as unapplied" payments that are sent in without the late fee should not be taken to mean it overrides other federal laws and regulations. Even though it may seem that servicers can engage in the act due to the Fannie Mae guidelines, the FTC opinion should be preferred.

Finally, homeowners or their attorneys attempting to stop foreclosure need to examine the actual mortgage contract to determine how and when late fees may be assessed. Any limits placed in the contract relating to default and extra charges should be complied with by the lender before any fees are assessed. Thus, the charges can only be applied if they are authorized by the contract and are not in violation of applicable state laws.

There are a number of legal defenses to foreclosure that homeowners may have in relation to the imposition of late fees. Some may be full defenses to a foreclosure lawsuit, while others may serve to reduce or limit the amount owed on the mortgage. These include, breach of contract, violation of state usury laws, violations of state unfair and deceptive acts and practices statutes, unjust enrichment, breach of fiduciary duty, and breach of good faith and fair dealing.

Unfortunately, late fees are only one of the many ways that lenders can apply more charges to a borrower's account and eat up any equity in the property. A future article will look at a whole range of other charges that servicing companies add on to the balance of a loan, and which are ripe for abuse against homeowners. Late fees, though, should be carefully scrutinized by borrowers and their attorneys.

In the past couple decades, since the government essentially created the abuse-encouraging mortgage servicing industry, there has been a wave of lawsuits against these servicers for a range of activities. Obviously, there is a systemic problem and homeowners need to be aware of it before they are taken advantage of. While there are a whole host of abuse practices these companies engage in, this article will look at five of the most common.

As ridiculous as it sounds, many mortgage servicers misapply customer payments. While they receive the full amount of a payment, they either do not apply it, apply it to the wrong account, or only credit a partial payment. For instance, a payment of $1550 may translate into $1150, creating a $400 per month shortfall that, over time, leads the owners into foreclosure. It may take months or years for the borrowers to recognize the issue and get it corrected, if ever.

Similar to misapplying payments is when a servicing company will just add late fees and property inspection charges related to a default when the homeowners have made all of their payments on time. This can be an outright lie and it is almost impossible to get the companies to admit to this and fix the problem. Instead, the borrowers may have to pay hundreds or thousands of dollars of these junk charges to get their loan current again, or face a fraudulent foreclosure.

Another clerical and record keeping error the companies make is when they force place insurance on a home that already has adequate insurance. The servicer will determine that the level of coverage is not adequate and will buy a policy through an insurer that is much more expensive than what the borrowers could get on their own. Even sending proof of adequate insurance is usually not enough to get the force placed policy removed, and the cost of this policy is passed along to the owners.

Closely related to claiming insurance policies have lapsed and forcing new charges on borrowers is the issue of servicers not paying property taxes. This has occasionally gone so far that the homeowners lost their property at a tax sale, and the servicing company ended up buying the home for just a few thousand dollars. The company keeps the escrow payments for itself, has government-imposed fees placed on the house until it is auctioned, and then buys and resells the house for a huge profit.

Finally, fraudulent mortgage servicing companies often engage in abusive collection practices against their victims. Requesting a simple payoff statement may lead to mass confusion as the servicer and its lawyers make up numbers that change by tens or hundreds of thousands of dollars by the week. Some courts have even found these companies making up payoff figures out of thin air, as they do not even have previous payment histories on loans that they purchase the rights to service on.

When homeowners feel that they are being taken advantage of by a bank or servicing company, they are often right to trust their intuitions. From imposing junk fees and forcing insurance on borrowers, to simply making up numbers out of thin air, the lack of due diligence in many mortgage transactions is astounding. The most important act homeowners can take in these types of situations is documenting the abusive actions and their attempts to fix the situation before the house is lost to foreclosure.

When homeowners fall behind in their payments, it is often the mortgage servicing company that initiates the foreclosure proceedings. While some borrowers have been successful defending their home due to the servicer or lender being unable to prove it holds the original note, not many people at all are aware of the fact that there are often three servicing companies involved in a foreclosure action.

The first servicer is called the master servicer, and homeowners may never know who it is or have much contact with the company. However, its role is to oversee all of the other servicing operations and companies that will be involved in the mortgage or any foreclosure proceedings.

It is the subservicer that the homeowners will have the most contact with during the time they are making payments on the mortgage. The subservicing company is the institution that collects payments from borrowers and maintains the escrow accounts for paying property taxes and homeowners insurance. If the subservicer does not take care of some of these services in-house, they may contract with tax service professionals and insurance companies, among other.

The third type of servicer is called a special servicer and is typically involved only when homeowners fall behind. After sixty days of late payments, the special servicer may begin loss mitigation attempts or just begin the foreclosure process. Again, this servicing company may contract out some of its functions, including loss mitigation, property inspection, or hiring local attorneys to foreclose on the house.

With all of the allegations of mortgage servicing fraud over the years, including misplacing on time payments, forced placed insurance, underfunding escrow accounts, making late property tax payments, and lying in court to cover up such activities, can anyone really trust these companies? They act like glorified collection agencies in harassing borrowers and actually make more money from defaulted loans.

Mortgage servicing companies are generally paid a flat fee based on the borrowers' monthly payments, usually 0.5% of all payments collected. But they are given a huge incentive to take advantage of unsuspecting homeowners because they retain 100% of any late payment charges or other fees. So the servicer has no incentive to help homeowners and make sure they pay on time or keep accurate records.

However, the companies have every incentive to "lose" payments and tack on a late fee. They have every incentive to put forced insurance on a home through an affiliated company, raise the monthly payment, and charge fees. They have every incentive to underfund escrow accounts, take money from the regular monthly payment to make up the shortfall at tax time, and then slap on a late charge to the account.

Servicing companies can provide a valuable service in the mortgage market by making it easier for lenders to engage in other business than collecting payments and administering accounts. But when these companies are given huge incentives to treat homeowners like deadbeats or turn them into foreclosure victims, one has to wonder what side the banks that hire these companies and agree to these terms are on.

Homeowners can use mortgage servicing fraud and abuse practices as a defense to stop a foreclosure lawsuit. Once mortgage loans are originated, they are frequently packaged and sold off to investors. While no one may really know who owns the loan, the rights to collect the payments are transferred to mortgage servicing companies. These companies are one of the greatest perpetrators of abuse and fraud against homeowners, as they have very little incentive to do right by the borrowers.

These companies are typically paid a flat fee by the trustees of the mortgage to administer the loan, collect payments, make sure property taxes and insurance are in place and paid through escrow, and pursue any foreclosure proceedings, if necessary. If homeowners do miss payments, the servicer gets paid anyway, and actually makes more money from a foreclosure than if they offered to work closer with the owners of the property to negotiate for a mortgage modification or other workout option.

That's right -- mortgage servicing companies actually lose more money when they help homeowners modify loans and save their homes from foreclosure! The fewer resources they dedicate towards loss mitigation and assisting borrowers, the more of the flat servicing fee they get to keep for themselves.

Of course, the parties on either side of the mortgage -- the homeowners and the holders of the loans -- lose far more in a foreclosure than a loan modification. But with a servicing company in the middle of the deal, it is more profitable to let a house go through the entire foreclosure process than to assist the borrowers in making the payments more affordable.

Servicing companies have also been found to "push" homeowners into foreclosure in a variety of abusive ways. If they are not pushed straight into foreclosure, the companies may covertly charge fees and extra interest, or credit payments late. If the owners ever do miss a payment (and many loan servicers only purchase rights to loans that are subprime or have higher risks of default), a foreclosure will quickly result and the costs to reinstate the loan may be astronomical.

The following is a list of the top seven most common mortgage servicing abuses that homeowners will run into. However, the ways that fraudulent companies can take advantage of borrowers are nearly endless, so if homeowners believe that they have been defrauded, they should take appropriate actions in court and with state and federal regulatory agencies. The more that they can discover about how their loan has been handled by a servicer, the better chance they have of proving servicing abuse and other related charges in a court.

• Junk fees masquerading as legitimate. These may include property inspection fees, broker price opinions, and outrageous attorney fees, among many others. These will be charged to a borrower's account in order to increase the amount of a payoff, thereby creating even more profits for a loan servicer during a foreclosure action.
• Failure to disclose fees during a Chapter 13 bankruptcy. Servicing companies seem to work even harder against homeowners once they file for bankruptcy. Fees can increase, but little justification for the fees will ever be given, even to the bankruptcy courts.
• Collection of junk fees even after discharge in Chapter 13. Because the company knows the homeowners no longer have the protection of the courts or the guidance of a bankruptcy lawyer, they can add the junk fees back in and charge them to the borrowers.
• Using junk and late fees to show negative payment history. This would help the mortgage servicer argue that the homeowners have failed to uphold the bankruptcy payment plan and that a relief from stay should be granted. The servicer can try and argue this even if the borrowers have made all of the required Chapter 13 payments on time.
• Attorneys for corrupt mortgage servicers just as corrupt. These attorneys will receive information they know to be inaccurate or misrepresented from the servicer and file motions in court like it was legitimate -- another case of lawyers abusing their positions in order to keep a rich client happy. But the lawyers also know that they can overcharge for legal and court fees and it will be charged to the borrowers' accounts. These fees may even be in excess of what courts have approved.
• Escrow account abuse. Servicers may create illegitimate escrow accounts to hide the fact that they are taking borrowers' money and applying it to junk fees, late fees, and interest, instead of on the actual amounts due on the loan. This pushes borrowers even further behind every month. Companies may also fail to fund escrow balances properly, creating negative balances when county property taxes or homeowners insurance are paid. The homeowners are then charged for this deficiency and fees and interest are added to the balance of the loan.
• Forced-place homeowners insurance. Too often, servicing companies will arbitrarily determine that the property insurance in place on a home is not sufficient, or they will simply deny there is any insurance present at all. At this point, the mortgage loan servicer will buy a policy from an insurance company it is affiliated with and charge the premiums to the borrowers. Unfortunately, the premium may be several thousand dollars more than the original policy was. But the servicer will adamantly, consistently deny that the homeowners' policy was adequate, and no amount of proof or phone calls will convince them otherwise.

Unfortunately, there are simply far too many ways that homeowners can be abused by servicing companies to list here. A surprising number of the largest names in mortgage servicing have been found engaging in these practices and have been forced to pay homeowners. A good attorney or foreclosure specialist trained in this area will be able to help the vast majority of borrowers determine if servicing abuse is a factor in their foreclosure.

Although there is no specific federal or state law outlining what constitutes mortgage servicing fraud or abuse, both areas of the law outline some prohibited actions for any mortgage lender or servicer. Regulation Z of the Truth in Lending Act is a good place to begin research, as well as any applicable state foreclosure laws, consumer protection laws, and banking regulations.

In terms of using this as a defense against a foreclosure lawsuit in court, homeowners may allege servicing abuse in the affirmative defenses or counterclaims portion of their answer to the complaint. Depending on the severity of the abuse, borrowers may be able to offset some of the damages they have suffered or have an entire defense to the lawsuit for especially egregious acts.

With the current high approval ratings of President Obama and his high degree of popularity among people, it should be no surprise that many websites and marketers are attempting to cash in. While companies are mostly free to use Obama's image on their products or services, it is still a "buyer beware" world.

Take, for example, the new Homeowners Affordability and Stability Act of 2009, President Obama's so-called mortgage foreclosure bailout plan. The plan is designed to provide $200 billion to Government Sponsored Enterprises Fannie Mae and Freddie Mac, with another $75 billion to be used to modify mortgages or provide government-backed guarantees.

According to the Federal Trade Commission, a number of scammers have already begun to capitalize on Obama's popularity and the new plan to trick homeowners in foreclosure. The FTC is holding a press conference tomorrow, March 4, 2009, to address some of these new scams that are attempting to pass as legitimate providers of government assistance.

PRESS CONFERENCE to unveil bogus Web sites and other scams claiming they can help individual consumers qualify for a share of stimulus package money. Many sites use photos of President Obama and Vice President Biden to give the appearance of authenticity. Sites also use logos from ABC, CBS, CNBC, CNN, FOX, NBC, MSNBC, USNews and other major media outlets to make them appear legitimate.

With all of the news coverage on the plan so far, every homeowner experiencing financial trouble is asking the obvious question: "Do I qualify?" Unfortunately, any homeowner trusting a seemingly legitimate news- or government-type website to find out if they qualify for the Obama mortgage bailout will run into a number of problems.

First of all, full details of the plan have not even been released yet, so it would be impossible to know if one borrower or another qualifies or not. While some different types of assistance and requirements have been put out by the government in preceding weeks, full details are not expected until at least March 4, 2009.

Second, from the details already released by the government, the Obama mortgage bailout may be difficult, if not impossible, for many owners to qualify for. Properties with a second mortgage or HELOC are disqualified, as are jumbo loans (over $417,000), and investment properties or second homes are ineligible for assistance.

Third, this program is still voluntary for banks and lenders that have not taken money from the government's Troubled Assets Relief Program (TARP). As with most of the voluntary programs so far, banks have done little to dedicate resources into assisting borrowers qualify for such government programs.

Voluntary government foreclosure relief programs like Hope Now, Project Lifeline, and the Hope for Homeowners Act have thus far failed to decrease the foreclosure rate. While the number of loans being modified has increased, the redefault rate has been disappointingly high. Can we expect Obama's plan to succeed where previous ones have failed?

Homeowners attempting to save their homes have much more work to do than just putting their faith in President Obama to solve the foreclosure crisis. While the new plan may be one more option borrowers can attempt to qualify for, every foreclosure situation is unique and requires a specialized approach, which cookie-cutter government programs can not provide.

Any website or company attempting to pass itself off as being affiliated with a major news network or as a government approved program should have homeowners running the opposite direction. Hopefully, the FTC will be doing borrowers a service tomorrow by warning them of such scams and explaining how to avoid them.

But in the meantime, it is still up to foreclosure victims themselves to do the necessary research to understand how foreclosure works and what methods, publicly or privately offered, can stop it. Ignorance of how mortgages operated helped create the housing crisis -- only a knowledge of foreclosure and awareness of scams and solutions will help end it.

The lack of creativity in foreclosure scam companies is stunning. Over and over again, homeowners are taken advantage of by the same tricks designed to fool them into sending money to a company that never provides any services. Once the company is shut down by state or federal regulators, the horror stories begin to come out, but the stories are the same in almost every case of a foreclosure scam.

The latest scam was shut down by the Federal Trade Commission (FTC) last week. Not surprisingly, the story was the same. National Foreclosure Relief, Inc. was a mortgage help company that send out deceptive marketing postcards to families facing foreclosure. Its “Fresh Start Program,” however, was little more than a way for the company to trick people into sending money, not helping them, ignoring their calls, and starting fresh with new victims.

The FTC recreates the language from a few of these marketing postcards, and homeowners are well advised to read them to be aware of the type of advertisement such companies will use to deceive the unwitting:

We are happy to inform you that you have been pre-approved to have your current mortgage, including your past due payments, wrapped into a new loan . . . Following final approval, our program may allow any foreclosure proceedings to be stopped.

It is required that you are notified of these options. We have attempted to contact you without success. Please contact us soon. Your time to enter a repayment plan is running out. Rights may include: 1. a repayment plan 2. putting your past due payments into the balance of the loan 3. paying your past due payments at the end of your loan. 100% GUARANTEE.

It is quite clear that the company was sending out these postcards hoping that any homeowner would read it and believe that it was the mortgage company itself, not the foreclosure rescue scam, that was offering the repayment plans, mortgage modifications, and other pre-approved programs. This is a common tactic scams use – attempting to trick borrowers into believing that they are affiliated with the original lender. People who have had their loans sold dozens of times often can not tell the difference.

But what happened to the people who were unfortunate enough to send money to National Foreclosure Relief, Inc.? The FTC states that, “Consumers who call the company are told that negotiations with lenders will begin once consumers pay a fee ranging from $300 to more than $1,000, which typically is paid before the consumer receives a contract. After the fee is paid, the company often doesn’t return consumers’ phone calls, and in many instances when consumers manage to reach a company representative they’re told, falsely, that negotiations are proceeding.”

This is one of the most common tactics that scam companies use to trick homeowners – taking money up front and then failing to return calls or complete any kind of work on the case. It is an almost too-easy practice that illegitimate foreclosure rescue firms engage in – easy to set up, easy to begin marketing, easy to trick unsuspecting homeowners, and easy to shut down the business, change the name, and move to the next town and begin all over again.

Just as the Savings & Loan industry in the 1980s was full of incestuous relationships between banks and the same players showing up again and again in failed institutions, the foreclosure scam industry seems like some coordinated underworld network. Companies seem to pop up for a few months, steal tens of thousands of dollars from homeowners, drop off the face of the planet, and then reset up shop somewhere else.

With the small amounts of money stolen from each homeowner and the ease of setting up such a business, expensive government regulatory resources simply can not keep up with the number of companies scamming borrowers. This is why it is vitally important for homeowners themselves to be aware of the dangers of such scams and to demand accountability and guarantees from any company they work with to stop foreclosure on a property in distress.

For more information on this case, see the FTC's press release about it here. A complaint has been filed against the company, but this does not indicate guilt or innocence. Homeowners, however, should always be on their guard when choosing a foreclosure help company to work with. While the vast majority provide useful assistance, a small number of scams have succeeded in giving the entire industry a bad name.

Governments at every level throughout the nation have set up so many requirements on any person or company attempting to engage in business related to banking, real estate, and lending, that it is almost too simple to point out licensing violations. This bureaucratic red tape is good for homeowners using such violations in self-defense when defending against foreclosure in a court of law.

The bad part is that, despite all this government manipulation of the housing market, crooks can and do find their way into the mortgage industry and take advantage of thousands of homeowners every year. And all of the costs associated with these licensing requirements are passed along to the borrowers anyway, when they buy a property and take out a mortgage from a bank or broker to finance their purchase.

Therefore, merely holding a license issued by a state government is really no guarantee of legitimacy or fair dealing. Small time criminals who set up homeowners into a few predatory loans may cause a small number of families thousands of dollars of damage, but they may also be too inconsequential of white collar criminals for government regulatory agencies to dedicate much of their funding to catch and prosecute.

However, it is still a good plan for borrowers to make certain that every person or company they deal with during their real estate transaction is properly licensed. If they find out that no license was in effect, and the mortgage bank knew about this factor or should have known about it, it may have a harder case proving its right to foreclose on a loan down the line. And it may be much simpler for property owners to show conspiracy or predatory lending if the broker and bank acted together to create an unconscionable mortgage.

Loan brokers and real estate agents are currently licensed at the state level. There has been some political will to create new federal mortgage broker licensing laws, but this has not been put into place yet. Appraisers are similarly licensed at the state level, if anywhere.

Banks may be licensed either by the state or the federal government, depending on how many assets it has, how many states it owns branches in, and if it elected to be a federal or state bank. Banks, though, will often be regulated at all levels of government to some degree.

Although filing complaints with the proper state or federal regulatory agencies may not help in a current foreclosure case, especially if the unlicensed party has left the industry and skipped town to avoid prosecution, it may help prevent that person from taking advantage of others later on. As well, if borrowers can show that they were given a loan or sold a home by someone without a state license, it may help bolster the rest of their case as to why the lawsuit should not be allowed to go ahead.

Sometimes, despite the fact that homeowners have done nearly everything in their power to avoid losing a home to foreclosure, the bank simply outspends them and breaks down their resistances. Lenders are aggressive when defending against claims of predatory lending or otherwise taking advantage of borrowers, and courts have typically been willing to rule against the owners and in favor of banks. But when homeowners have run out of options on their own home, the best action may just be to alert others that the mortgage company may be running a scam.

Federal and state regulatory agencies rarely go after the largest banks or mortgage companies, unless there is an economy-wide scandal or especially egregious acts of preying upon consumers. But even then, it is more likely that banks and large lenders will not be targeted directly. The consequences for regulators in going after these giant corporations are far too great, as the largest financial institutions in the country bankroll the state and federal governments.

Take the cases of Countrywide and the governor of Illinois, Rod Blagojevich. Countrywide had been making subprime loans for years to borrowers who could never hope to pay them back. But few states ever looked into the bank's lending practices until the subprime mortgage market collapsed and the foreclosure crisis began to create a drag on the national economy. Then states began investigations and lawsuits against the company, but it was already almost too late, as the company had sold itself to Bank of America. Why did the states wait so long to address obvious predatory lending?

And the governor of Illinois was just recently arrested for attempting to sell the US Senate seat left vacant by president-elect Barack Obama. Curiously, the arrest came less than 24 hours after Blagojevich ordered state agencies not to do business with Bank of America any longer. Of course, this may answer the question of why other states waited so long to investigate Countrywide until after it had collapsed and been eaten up by a larger lender.

Thus, it may be wishful thinking to expect that homeowners who have lost a home to foreclosure can find any real justice with regulatory agencies. The most they can probably hope for is that the agencies allow other potential customers of these companies to search for previous complaints and determine which lenders to stay away from. In any case, however, homeowners who believe they were unfairly taken advantage of should pursue filing complaints in order to warn regulators of predatory activity and alert other borrowers to problems with mortgage companies.

Homeowners also need to know which regulatory agencies they should contact for particular types of banks. The following list should be referred to as a rough guide and will cover most, if not all, of the types of lending institutions the typical borrower will have any kind of mortgage transaction with, as well as which agency to submit a complaint to, if the need arises.

• National Bank: Office of the Comptroller of the Currency


• Federally Insured Savings and Loan: Office of Thrift Supervision


• Federal Savings Bank: Office of Thrift Supervision


• State-Chartered Savings Institution, Federally Insured: Office of Thrift Supervision


• Federal Credit Union: National Credit Union Administration


• State-Chartered Credit Union, Federally Insured: State Credit Union Agency, Federal Trade Commission


• State-Chartered Credit Union, not Federally Insured: State Credit Union Agency, Federal Trade Commission


• State-Chartered Bank or Savings Institution, Not Federally Insured: State Banking Agency, Federal Trade Commission


• State-Chartered Bank, Not Member of Federal Reserve System, Federally Insured: State Banking Agency, Federal Deposit Insurance Commission


• State-Charted Bank, Member of Federal Reserve System: State Banking Agency, Federal Reserve Board

Any type of lender that is not on the above list and that homeowners want to submit a complaint about should contact the appropriate state agency. If one is not available, the state attorney general or state banking department should be contacted. In fact, the state attorney general can be sent a copy of the complaint for any of the above-listed lending institutions, as the states do have the right to investigate banks or mortgage companies doing business in their territories.

Again, homeowners who have lost a house to foreclosure may be disappointed if they believe any regulatory agency will come to their rescue, put the lender out of business, and give them their home back. This will not happen. But borrowers who feel they were taken advantage of may wish to keep a record of their complaint with the appropriate agency; after all, when enough people complain about a company, there will be no other option than to investigate it and shut it down.

A loan modification is when a lender modifies your current mortgage to work with you because of personal economical hardship. If you are facing foreclosure, a modification can make your home more affordable. This solution will be some form of a rate reduction and conversion of an adjustable rate mortgage to a fixed loan, usually 30 years fixed.

Today a lot of people are advertising themselves as loan modification specialists. These impostors have displaced mortgage loan underwriters doing the negotiations. Because of this homeowners should be cautious when choosing a company and only work with a company who has licensed attorneys to do the negotiations.

With the financial downward spiral that has taken hold of the nation, many lenders are busy with homeowners trying to stop foreclosure. With all the people facing foreclosure, they just do not have the man power or ability to save everyone. Some people just get passed over or lost in the system. You do not want to end up losing your home, just because someone does not have time to look at your case.

Homeowners facing foreclosure will not get the same results as someone who has legal representation. When a homeowners fall on desperate times, lender may take advantage them, or their lack of knowledge and negotiating skills may hinder them from finding the help they need. Homeowners can, and usually do, end up settling for much less, rather than finding professional help. A lawyer will make sure that your calls get responded to and letters are answered, which can make the difference between saving your home and losing it. Make sure the company you choose has an in-house attorney who is a leading expert in the field of real estate litigation and negotiations.

A common loan modification scam is to charge a separate fee if you have a second mortgage. Keep in mind that you should never have to pay a separate fee if you have a second mortgage. If they try to charge you one that is a sure sign you are being taken advantage of. It is a very common tactic, so watch out for it and move on to another company.

If you end up using a company that does not use attorneys, one thing to keep in mind is that you should only work with a company that has a 100% money back guarantee. If company is as good as they say they are, they should have no problem standing behind their word. If they do not have 100% money back guarantee start looking for a new company, there are plenty out there that do. Make sure you get the guarantee in writing as well. But remember, if a company is scamming you, they may offer a guarantee, with no intentions of honoring it. A guarantee is only as good as the company who stands behind it. Make sure you do your research to make sure the company is not a scam.

Finally, each loan modification should also come with a Cease and Desist letter to your lender. This prohibits lenders from contacting you personally and to get in touch with your attorney instead. You are paying for them to watch your back and take care of you, so make sure that they are.

There is a lot of negative press going on with false loan modification companies, so it is extremely important that you find a legit company to represent you. They are protecting, something personally dear to you, your home, so use these tip and find the right company to save your home today!

The credit crisis has begun to show us all just how many homeowners were taken advantage of during the real estate boom with creative financing vehicles like Option ARMs and subprime mortgages. And while servicing fraud has always been a part of the mortgage industry, more equity was created out of nothing during the bubble than in years past, which has made even more borrowers prime targets for financial terrorism on both the front end of the mortgage and during the period of repayment.

Predatory lending is often used to describe poor loan placement, deception in the terms of the agreement, shady brokers using blank documents and not making important disclosures, and other related scams. Many of these tactics are used to fraudulently induce buyers or current owners into taking out a loan that is not in their best interests and which they will most likely fail to repay. But the extra fees generated at the closing for the lenders make such practices attractive to banks and loan originators attempting to cash in before the loan goes bad.

For example, take the case of John and Mary, who wanted to use the equity built up in their house to pay off high credit card balances, replace an old car, and put some extra money in the bank. Despite the fact that their credit was not good, their mortgage broker Bill put them into a 90% financed Option ARM at 3% interest for the first five years. John and Mary were not told it was an adjustable rate mortgage -- Bill simply signed their names on the required disclosure. But that was perfectly alright with John and Mary, who had applied for a stated income loan and "rounded up" their monthly income an extra few thousand dollars.

At the closing the loan, John and Mary thought they had gotten a great deal on a low-interest mortgage. Little did they know that their minimum payment would not even cover the interest charge, and every payment they made would cause them to fall further behind, thereby eating up the remaining equity and resulting in a negative equity position. Like so many homeowners, though, they did not read their mortgage statements and would not have understood the numbers even if they had read them.

On the other hand, mortgage servicing fraud happens after the loan has been originated. The lender packages the mortgage with other similar debt products and sells this package to investors such as hedge funds or financial investment firms. The rights to collect the payments are sold to pension funds or mutual funds, while a servicing company is hired to administer the loan, do the accounting, receive the monthly payments, maximize profits and minimize losses on the debt products, and proceed with a foreclosure if the owners default.

The fraud comes in when borrowers are deliberately pushed towards foreclosure by the mortgage servicer. This may be a result of "accounting errors," forced insurance, "misplaced" or "lost" payments, or negative escrow balances that incur late fees and interest. In any event, the company increases junk charges in order to make it nearly impossible to stop foreclosure by paying back the loan, and the mortgage company ends up being able to sell the house on the open market after a sheriff sale for a price that far exceeds what they would have received if they had simply serviced the loan legitimately and collected payments over time.

So in our example above, after the first two years of making payments on their loan, John and Mary received a letter from their mortgage servicer threatening foreclosure because they were behind by three months. Knowing that they had not missed a single payment, Mary called the lender. After spending an hour and a half on hold, she was told by a customer service rep that they did not have qualifying homeowners insurance, so the lender had placed their own insurance on the house, at a high rate. Mary, of course, knew that they had property insurance and offered to fax proof to the mortgage servicer.

When proof of insurance was faxed, John and Mary thought the problem was taken care of, so little did they expect to be served by the county sheriff with foreclosure lawsuit papers a few weeks later. They immediately called the mortgage company, who informed them an hour later that they had never received the faxed insurance papers and gave the couple a new number to fax it to. John complied by faxing and getting a confirmation the paper went through, and called the next day to make sure. Imagine his surprise when the company said it had not received the fax and that the forced insurance would stay and the foreclosure continue.

By this time, thousands of dollars of extra fees for the placed insurance and lawsuit had been added to the loan, along with several miscellaneous corporate charges, escrow charges, and others. The servicer refused to explain any of these charges over the phone and would only fax payoff statements through their attorneys showing the total amount of the fees, not what they were actually related to. At this point, John and Mary stopped thinking a horrible mistake had been made and began to realize something much more sinister was going on with their loan and that they had become victims of a corrupt bank.

Although they had missed the time to file an answer to the foreclosure complaint, and a default judgment had been awarded to the bank, Mary went to the courthouse and demanded to speak with the judge. The judge listened to her, but refused to acknowledge any of the fraud, rules violations or mistakes the lender had committed, saying to Mary, "They have a judgment against you; you had time to file an answer just like anyone else. If you don't like it, you can appeal or hire an attorney." At this point, the couple realized the corruption of the bank had spread into the local government, as well.

With the sheriff sale fast approaching in a couple of months, John and Mary did all they could to borrow from family and save up enough to pay off the amount the servicer said they owed. But a month before the auction date, the family received its latest mortgage statement showing a doubling of their mortgage payment. The original Option ARM loan had reset to a higher interest rate, and because the loan was underwater, the payments were increased even more to start paying down the mortgage over the remaining term.

At this point, with their credit rating destroyed, the mortgage payment doubled even if they could save up enough to reinstate, and the house up for auction in a month, John and Mary threw in the towel. Although the loan originator and mortgage servicing company had made their thousands of dollars, and the family had never missed a legitimate payment, they felt there was little else they could do than move on, blaming themselves for the failure. Everyone, from the banks to the local government, it seemed, had decided they deserved to lose their home and suffer the effects of a foreclosure for the next decade of their lives.

How many more people like John and Mary will come out with similar stories of mortgage fraud from beginning to end, a fraud which they may have participated in but which only they have felt the negative consequences of. Accountability for the banks is a hollow catch phrase when they are receiving hundreds of billions of dollars in bailouts, while bankruptcy reform laws make it more difficult for homeowners to get out from under crushing debt burdens. And the government, in bed with the banks from the local levels to the heights of power in Washington, takes money away from the people to keep the fraudulent monetary system afloat for a few extra months.

Our mortgage and real estate industries are corrupt from top to bottom, from beginning to end, and the foreclosure crisis is just another way for the banks to impoverish ordinary people while enriching themselves. That they have the audacity to perpetuate such frauds on homeowners and then blame those same homeowners for the collapse is a signal of just how much more powerful banking interests are than the people. That elected officials go along with the charade by bailing out the banks and sticking people with the bill is even more reprehensible.

Regardless of how reasonable a loan product homeowners may have been offered at the time of purchasing a house or refinancing, things can quickly go from bad to worse if a predatory mortgage servicing company is involved. These companies are hired by large financial investment banks to receive payments on mortgages and keep track of all of the fees, as well as proceed with a foreclosure if need be. However, their first priority is to maximize the profit of every loan they administer, which may lead to cases of corruption and fraud.

In some cases, a fraudulent company will begin adding junk fees, lose a few payments, or place forced insurance on a property even before the homeowners miss a monthly installment. When they do fall behind, though, the mortgage company will begin accelerating fees very swiftly and add even more charges that seem completely illogical. While the homeowners are facing a financial crisis, the acceleration of these fraudulent fees can ensure it costs them thousands of dollars more to stop foreclosure than it would have if the charges had not been added.

In fact, the presence of numerous junk fees before or during a foreclosure is one of the clearest indications of mortgage servicing fraud. Homeowners may make a payment on time, but it is credited to the account late, which incurs a late fee and extra interest. After a few months of this, the borrowers may be more than a month "behind" in payments as a result of the extra charges, even if they think they have made every payment before the due date.

Unfortunately, usually no amount of arguing with the servicing company results in a positive outcome. Getting a servicer to admit making such a mistake may reveal that this is a standard operating procedure, and these companies do not want to be caught in a court of law stealing homes to maximize profits. Typically, they will deny, threaten, or stonewall homeowners to avoid dealing directly with the charges on the loan.

Even more unfortunate is that many local court judges go along with the servicer, because the borrowers are behind in payments, after all. This is what makes the scam so devious -- the company will add thousands of dollars of fees, but not act on it until the borrowers miss a payment. When they fall behind a few months, the thousands of dollars of fees, plus interest, plus foreclosure costs will immediately make it prohibitively expensive to get back on track or qualify for a mortgage modification or other solution.

Making the playing field more uneven, the mortgage servicing companies have so many more financial resources than the average foreclosure victim and can hire high-priced local attorneys. The lawyers will do everything they can to pursue the foreclosure quickly and defend aggressively any claims of fraud or excessive fees. But it may only be in the courts that homeowners can stop the foreclosure process before their home is sold out from under them; the servicing companies will do everything possible to postpone serious solutions until they are able to steal the house.

To defend against such predatory servicing, homeowners should request that all fees be disclosed and clearly explained so they can verify what the fees are for and if they are even legal or owed. It may be better to hire an attorney to handle this challenge in court, but borrowers may be able to request this information from the company directly. Verbal requests will not do the trick and will be ignored for days while the servicer adds more fees and interest, and even a fax can be ignored for a few days; the best way to request this information would be in writing with certified mail.

The federal Real Estate and Settlement Procedures Act (RESPA) gives borrowers the right to request the disclosure of fees for their loan through a "Qualified Written Request." Even if homeowners may feel the fees they are paying are reasonable, as unlikely as this sounds, it makes for a better defense against foreclosure to request that the fees be clearly documented and verified. Lenders have to acknowledge the request within twenty days and either correct the account or give a statement explaining the fees within sixty days.

Most of the tactics used by companies engaging in mortgage servicing fraud have the end goal of increasing fees to make it nearly impossible for homeowners to save their properties from foreclosure. The servicer eats up the equity through junk fees, and then turns a profit when the house is sold on the market after a foreclosure sheriff sale. This results in higher, much quicker cash flow for the investors than if the loan was administered legitimately and paid off over time. Contesting the junk fees and making mortgage companies explain them adequately may be an effective, little known defense homeowners have against such mortgage misconduct.

With all of the finger-pointing and outcries about corrupt lenders and greedy mortgage brokers and real estate agents, every homeowner facing foreclosure may feel victimized. And certainly, there was a lot of deception and outright fraud in the mortgage markets during the boom years. But there are a few important signs to watch out for that may indicate the presence of a predatory mortgage company.

One of the clearest signs of predatory lending may be when homeowners or buyers are asked to sign documents that are completely blank or told to leave off the date. This gives criminals the opportunity to backdate, forward-date, or fill in incorrect information on a mortgage application or disclosure forms, keeping important notices from the borrowers. When the time comes to close the loan, the buyers may receive a completely different loan than they originally were sold, but which curiously has what appears to be their signatures on all the required documents.

Closely related is the issue of being asked to sign documents that have blatantly misleading or false information on them. Inflating a family's monthly income to qualify for a higher mortgage payment is nothing more than a set-up for failure down the road. Of course, some borrowers did this voluntarily and lied on their loan applications without the knowledge of their broker, but being asked by a loan originator to sign off on incorrect figures will lead to unintended consequences and possible foreclosure or prosecution for mortgage fraud.

Loan originators were also guilty during the bubble of putting homeowners in inappropriate loans with high interest rates or deadly interest rate adjustments. They persuaded the borrowers to go along with the loan in the hopes of refinancing in a year or two when their credit had improved. As is now known, however, most people did not qualify for the mortgages in the first place and were unable to qualify for a refinance once interest rates were raised and credit started becoming scarce. This helped lead directly to the foreclosure crisis now facing the economy, as subprime borrowers never became prime; they just became sub-subprime.

Also, it is vitally important that homeowners, at the time of closing, carefully read the sales agreement and loan documents, especially the sales contract and Truth in Lending disclosures. If there are any discrepancies, or the borrowers are being asked to sign for a loan that is different than the one they were promised, predatory lending may be being committed. In fact, borrowers should have copies of the closing documents at least 24 hours before the closing, and have reviewed them thoroughly and be ready to have any questions answered.

Realtors and mortgage brokers who relied on corrupt appraisers were also complicit in predatory mortgage schemes designed to boost their own profits at the expense of borrowers' abilities to pay their loans. Although homeowners want some appreciation of their properties, if they were originally sold a house at the top of an artificial market, an inflated appraisal may have been used. Home values should reflect the current market conditions -- not be inflated to the very highest amount that can be borrowed, putting the owners into a loan on a house that is not worth even close to what they pay for it.

Unfortunately, the amount of greed in the real estate markets facilitated by the Federal Reserve and the banks have led directly to a foreclosure crisis of epic proportions. So many first time buyers and uneducated owners were taken advantage of by mortgage lender misconduct and predatory loans that it is difficult to separate the unqualified borrowers who got in over their heads from the truly criminal mortgage companies that fraudulently induced this toxic debt. But if homeowners suspect they are a victim of mortgage fraud in any way, they should contact the appropriate regulatory agencies and make sure to fight their foreclosure in court for as long as it takes.

The creative tactics that foreclosure scam companies use to steal money and trick innocent homeowners out of their houses would be entertaining if the results were not so tragic. From phony documents and forged quitclaim deeds to pointless mitigation services and companies that change their name every other week, the number of potential scams seems endless.

One group of scammers, though, had put a 19th century spin on this 21st century foreclosure crisis. A San Diego, California based company called Federal Land Grant Company that has been shut down by that state's attorney general persuaded homeowners to transfer the deed to their house into a vehicle called a "land grant." This vehicle is absolutely fraudulent and has not been used in over one hundred years.

For some historical background, the Federal land grant system was used during the colonial period to encourage settlers to move into and develop newly acquired property. As America expanded further westward, it ended up with vast swaths of mostly empty, unsettled land and used this system to encourage further expansion. It was also used to facilitate industry and transportation, with four out of the five transcontinental railroads being built with assistance from the land grants.

But this type of instrument has not been used since the 1800s and is no longer recognized by any competent court or county government. However, this company charged $10,000 per house to be transferred into the land grant, had the homeowners sign over the deed to their house, and then had the audacity to charge rent. All for a completely fraudulent scam.

Using documents from hundreds of years ago, the company persuaded homeowners that this phony solution would actually prevent the bank from being able to take the house back through foreclosure. In the end, many of the victims were simply evicted from the house after the court proceedings and sheriff sale. Transferring ownership of the property, whether through legitimate or phony documents, does not transfer the responsibility of paying the mortgage.

This should be a stern warning to homeowners against trusting any company that offers a solution to foreclosure that seems too good to be true. Just because a company offers weekly seminars and uses complicated terms to describe their "unique," "creative," "proprietary" process does not mean that the company has anyone's interests at heart besides its own.

At the very least, before considering transferring ownership of a property to stop foreclosure, homeowners should consult with their own legal counsel. Deed transfers, land trusts, land grants, quitclaim deeds, or whatever term the scammers use should all be reviewed by someone competent to read and understand the contracts and the ramifications of entering into such agreements.

This Federal Land Grant Company had tricked over 300 homeowners into transferring their properties into the phony system. This means that 300 properties have now been transferred out of the hands of the original owners who are still facing foreclosure on these houses. If any of them had consulted with an attorney or knowledgeable real estate professional before entering into the agreement, they could have avoided this situation.

Now, for the majority of these homeowners, matters are much worse. They do not currently own the house but have to find some way to avoid losing it to foreclosure. Without a clear title, refinancing, selling, or even offering a deed in lieu will be much more difficult. And although this particular scam will be forced to shut down and may have to to provide refunds to their clients, they will have been responsible for the loss of a significant number of homes.

Staying away from foreclosure scam operators is not easy when faced with the loss of a home. Desperation to save the house and ignorance of how the foreclosure process works contribute to homeowners being more susceptible to these scams than they would be otherwise. If ownership of a house is to be transferred, though, homeowners should consult with a competent legal adviser and clearly understand what will happen to the mortgage if they no longer own their home.

One of the most common complaints of foreclosure victims is the enormous amount of mail that they seem to get from individuals and companies all over the country. Many of them offer to buy the house for bottom dollar, while others provide various mortgage help services to homeowners in danger. But the sheer volume of this type of mail is often very disconcerting to homeowners, who begin to believe that everyone in the country knows they are in foreclosure, and soon everyone on their block will know, as well. Getting the flood of postcards to stop, though, is much easier said than done.

As a small consolation, though, most of the general public is not going to read any one particular foreclosure victims' mail. Most people, even neighbors down the block, could care less if a particular homeowner in foreclosure or not. Furthermore, in the worst housing markets of the country, many homeowners in the community will be receiving the same types of mail, since many of the residents will be facing their own foreclosures. But even in the most insulated housing markets, where few foreclosures are being pursued, the average person has no interest in reading another's mail; there is simply too much junk mail of their own to keep up on, let alone making a habit of reading others' junk mail.

Also, even people who are not in foreclosure or own a home get postcards about various methods they may have available to stop foreclosure, applying for credit cards, getting out of debt, getting a new car loan, going to college for free, and any number of financial offers. Any particular homeowner will not be the only person in the city getting this kind of bulk mail, but they may just happen to be in foreclosure at the time of getting the mail. This is unfortunate, but does not change the fact that foreclosure mail spammers will send out their propaganda to everyone that they can, in order to have the highest response rate to their mailings.

Anyone who wants to know about a particular property being in foreclosure can find out in numerous other, more effective, less time-consuming, less illegal ways than reading every homeowners' mail. The filing of the foreclosure lawsuit is in the public records kept by the county, and anyone in the world can call the sheriff's department or the county clerk and ask about the status of a piece of real estate. These callers will be told that the property is currently in the foreclosure process, and they can also be told by the courts who is the defendant in the case (the homeowners) and who is the plaintiff (the bank), as well as the attorneys representing each party. So the information relating to the foreclosure status is not at all secure to begin with.

The only realistic chance of stopping the flood of postcards and offers of help is for the homeowners to try sending these places back their mail unopened or with a big "Return to Sender" mark on it. That may cut down on the mail they are receiving, although new mailers will be sent out even long after the foreclosure victims have left the house. Alternatively, they can call the numbers on the mail and tell these investors and companies to stop sending out the information. But it is not wrong for them to point out a condition of the property that is public knowledge, nor are these types of mailings illegal in any sense. They may be irritating and embarrassing, but they are just a minor part of the foreclosure process that must be dealt with.

There is no question that the foreclosure industry has scam operators simply running rampant throughout it. The reason for this, of course, is not very difficult to figure out. After all, families in desperate situations are trying their hardest to save their homes, but are immensely terrified of dealing with the mortgage company. So they decide to hire an outside, unrelated third party with no interest in the situation to help them deal with the lender. Is it any wonder why the industry attracts some of the worst, least ethical, most immoral bottom feeders?

Unfortunately, we come across numerous homeowners every day who say they were taken advantage of by a foreclosure scam, who promised them help, took their money up front with no guarantees, and then disappeared. Preventing just these sorts of victimizations is exactly why our website encourages homeowners to read and understand the foreclosure process on their own, before taking the next step and hiring any company to help them stop foreclosure.

But for the homeowners who have already lost a significant amount of time and money to a scam operator, there are a number of resources that may be available to get their money back, or at least alert other foreclosure victims of the danger of a particular company or individual.

Homeowners who have been scammed, though, should be aware that if the person who tricked them simply left town with their money and moved on to another city or state with no forwarding address, the homeowners will have a tough time finding the person even just to request their money back. Foreclosure scams are notorious for shutting down one business and opening another every few weeks or months in order to keep operating under the radar. The homeowners' money is probably gone and spent by now, and it might not be enough to initiate a small claims lawsuit against the company, even if they can even find the owner to serve him with the suit. It may be best to move on and attempt other methods of saving the home, rather than spinning their wheels and trying to get back the wasted money.

Many homeowners looking for a foreclosure help company perform some due diligence, but not nearly enough. One of the first, and usually the only, source they check for information about a company is the Better Business Bureau. However, the BBB is little more than a membership program for companies who want to make themselves appear legitimate. Anyone can register their company the BBB by paying a fee and giving out some information about the location, owners, and contacts for the company.

If the homeowners search for a brand new foreclosure help company, or one that has not received numerous complaints up to that point, they may feel very secure in trusting the legitimacy bestowed by the BBB. In many cases, though, the BBB will know even less about the company and its owners than the homeowners who have been speaking with them for some time.

In fact, only when there are numerous complaints will the BBB take any kind of action, which is usually just removing the company from its membership rolls. Of course, knowing a company is a scam after having one's money stolen is very small consolation for most homeowners, as the scam may have led directly to their inability to save the home from foreclosure. Thus, trusting in only the Better Business Bureau to prove the trustworthiness of a certain company is simply a mistake.

Homeowners who have been taken advantage of by a scam company, though, should try to complain about the company to the BBB, but take it even further to regulatory agencies. Some of these resources may involve contacting their state's and the state's in which the foreclosure help company was located attorney general consumer fraud division. The attorney general can initiate an investigation into a company and order a "cease and desist" letter, ordering the company to perform no other services or spend any of its money until the attorney general has investigated.

This only happens in cases where there are numerous complaints, but homeowners should alert the state if they have been taken advantage of. If enough foreclosure victims do this, the attorney general will have no other choice but to open an investigation and attempt to shut down the scam.

Other sources to file a complaint about a company include the state office of banks and real estate supervision, the city or county the business was located in, the Federal Trade Commission, and any other agency that handles real estate, banking, or consumer fraud. Every state will have different names, different divisions, and different agencies, but homeowners should have numerous resources available to them. If they do not get their money back, as is most likely the case, they can help make sure the illegitimate company does not further victimize foreclosure victims.

A final source to get the message out, so to speak, about the scam involves contacting local news stations where the homeowners can give out their story of being scammed while trying to stop foreclosure. News media and television stations are always looking for human interest stories, especially if the homeowners have not yet saved the house but were taken advantage of for their life savings or several thousand dollars that could have been used to pay the mortgage. Using this media, though, depends on how much publicity the homeowners are willing to take on. It might alert other foreclosure victims to the company's scams, though, and the record foreclosure rates in the country show that there is no shame in falling behind.

After falling victim to a foreclosure scam, homeowners may be better off just moving on and finding some way to stop foreclosure on their own with the time they still have available. There are numerous resources online, including (especially) our website's foreclosure information section and blog to educate oneself about the foreclosure process and what options might be available for any specific set of circumstances. To save a home from foreclosure, it is usually better to trust no one for now, until the homeowners understand more about how foreclosure works, and only hire a help company if they know exactly what they are getting.

Hiring the right foreclosure help company can mean the difference between saving a home and negotiating a realistic deal, and losing the home, wasting time, and falling victim to scams. But, unless homeowners know enough about the process to assess the possibilities of being taken advantage of, and the very real benefits of hiring a company to assist them in avoid the loss of the house, they should trust only themselves.

Over the past years working with foreclosure victims, it is always amazing to see the complete incompetence of mortgage lenders. When working with these homeowners, foreclosure case workers or loss mitigation representatives go to nearly any lengths to avoid helping their clients. It seems they do anything possible in order to delay a resolution, instead allowing the home to get dangerously close to the sheriff sale before turning down the workout program entirely.

In cases where the homeowners are facing the loss of their homes due to negligence or fraud on the part of the lender, the incompetence is especially frustrating. Our observations over years have alerted us to a few of the various ways that banks push paying customers into foreclosure in order to steal the home and extract the largest profit possible at the expense of the homeowners. This type of scam is mostly perpetrated by servicing companies and operates in several ways, all of which we have witnessed numerous times.

Homeowners in these and similar situations may feel as if they are the only ones caught up in some kind of Kafkaesque debacle. The lenders play the part very well through their own genuine incompetence at the customer service level. Remaining on hold for three hours a day just to confirm that a fax has been received (when it had not been received any of the previous three times it was sent) is a simple tactic resulting from understaffed loss mitigation departments and increasing foreclosures. But more and more experience and research shows us that these are not isolated events, but carefully planned manipulations of mortgages, resulting in forced foreclosures.

Possibly the most common scam that we have witnessed is when the lender places a forced insurance policy on a property. They claim they have not received proof of insurance and then force the owners to pay extra every month for the policy. Often, they place the insurance without informing the homeowners, who make their regular monthly payment, which is first applied to the policy and then to interest and principal. This makes them late on the bill even though they are paying on time every month. Faxes to the lender of proof of insurance will not convince them, if they confirm receiving the documents at all. Homeowners may only learn of the insurance policy when they are being sued for foreclosure, and assume that a horrible mistake had been made.

Another way that mortgage servicing companies push properties into foreclosure is by paying the property taxes late and charging the late fees to the homeowners' account. The next payment the homeowners make will be applied to the taxes and late fees, while the principal and interest will be partially late. Again, the foreclosure victims may not realize the scam until they are being sued and their home is scheduled to be sold at a county auction. Even then, they may have little idea of how to defend themselves in court against a company with thousands of successful foreclosures behind it who has hired local attorneys that specialize in such cases. The loss of the home may be all but guaranteed at this point.

These are the two most common ways, in our experience, that servicing companies have been known to force homeowners into foreclosure. The deviousness of the scam, combined with the bureaucratic inefficiency of many of these companies, often create the impression that errors have been made that can be corrected, as long as the homeowners can talk to someone, explain what happened, and straighten out the mess. Unfortunately, customer service centers may be specifically designed to delay the homeowners as long as possible, leading them to believe they are working out a solution, while the attorneys proceed ever more quickly to the foreclosure auction.

Even more unfortunate is the fact that homeowners have little alternative when they become a victim of this scam. Once they are behind in payments or in foreclosure, the servicing company will make absolutely sure that the balance due on the loan strips the property of its equity. This also dramatically decreases the chance of qualifying for a foreclosure loan or other solution, and increases the amount necessary to begin a repayment plan with the company. A house with little equity can not even be sold quickly enough to ensure that there will be any equity by the closing. The servicing fraud scam is one of the most disturbing in the industry, and one every homeowner should be aware of, because the power of the perpetrators so outweigh the victims in terms of money, legal expertise, and previous successful cases.

When homeowners are in danger of losing their homes and have not done the necessary amount of research into how foreclosure works and how to combat it, they are quite prone to falling for sales gimmicks and fancy although spurious, titles. A number of foreclosure help companies, in an effort to help their employees appear more knowledgeable than they really are, have begun to rely on simplistic training courses and unconvincing titles like "Certified Foreclosure Specialist," "Certified Loss Mitigation Specialist," or others. While there is no doubt that there is such as thing as a "Certified Foreclosure Specialist," it is more a matter of who certifies them and what they have do to earn that certification, and if these training courses give the employees more knowledge than the average foreclosure victim could gather on his or her own.

The few companies that are now offering this kind of course usually fall into one of two categories. The first is a foreclosure help company that gives new recruits a "training course" designed to teach them about how foreclosure works and how that company's products can help homeowners solve the present crisis. Once the new recruits have been trained, they are given a meaningless certificate proclaiming them to be Certified Foreclosure Specialists, or some similar title. In some cases, the new recruits will have to pay for the training, while it will be given to them for free with other companies. The training, though, is more of a "product certification" course, where the recruits learn how that company's services work, rather than all of the various methods homeowners can use to stop foreclosure, and when each of them is appropriate or not.

While these courses may provide significant knowledge that the new specialist can call upon when speaking with foreclosure victims, there is a conflict of interest when a company certifies its own employees as specialists because they have completed a course that the company has itself designed. If a new employee working for McDonald's were to be given a piece of paper calling him a Certified McBurger Culinary Specialist, it would have the same amount of credibility; that is, none whatsoever.

However, after receiving the certification, the new recruit is able to start selling the company's foreclosure help products. This usually means recommending homeowners for loss mitigation and repayment plans in order to get their mortgage back on track. Whether this works in every single situation or not is usually not considered; just recommend everyone, find out who has the money to pay, and see what sticks. Of course, this is not to say that every loss mitigation company is bad, either, as there are many ethical ones that we have worked with and have recommended our clients speak to. But relying on a spurious, conflict-laden title to build false credibility with a homeowner in danger of losing a home is certainly not a good sign.

The second type of company offering this type of foreclosure training specializes just in training people to be independent foreclosure experts. The company sells a book, software, or online training course, and the newly certified idiot is sent out on his own to attempt helping people in foreclosure to save their homes. No supervision necessary, no legal review of current foreclosure laws provided: just complete a 2-week training course, pass a final exam, and start charging homeowners whatever they can afford. The problems with this are numerous, from the perspective of the homeowners, who may be working with a self-proclaimed expert who is brand new in the foreclosure industry. From the perspective of those hawking their course, though, this is a winning situation: they provide the training and certification for a fee, while avoiding any legal liability for what their students do with the training afterwards.

For homeowners in foreclosure confused about such issues as who to trust in foreclosure, and whether "experts" with fancy titles are more or less trustworthy than others lacking such titles, it is important to be aware that there are such things as "Certified Foreclosure Specialists," "Certified Loss Mitigators," and various others. But it is even more important for foreclosure victims to ask who certified them, and if it was the company they now work for, to be suspicious. Also, ask them also what makes them a specialist, and if they say because they passed the certification course, be even more suspicious. Again, it bears repeating that, every person in the foreclosure industry will be more or less knowledgeable, and homeowners should do their own research on foreclosure before trusting anyone to provide them with foreclosure advice or assistance. Just finding someone trustworthy (certified or not) who knows about foreclosure and how to help homeowners is a better alternative than relying on a title or fancy certificate that has little backing to it.

The lure of making money by investing in foreclosure properties has too many times led to real estate professionals taking advantage of homeowners facing the loss of their homes. Their focus on reaping huge profits from these properties causes them to lose sight of the moral and ethical side of doing business and providing a helpful solution to assist foreclosure victims. In response to these practices, some states have begun regulating how investors and foreclosure help companies do business in certain situations, including profit-capping measures for investors and fuller disclosure requirements in the area of loss mitigation. In addition, courts have ruled that, in some cases, the popular rent-back or leaseback option counts as a loan to the former foreclosure victims, rather than a rental agreement, forcing the investor to foreclose on the property again if the renters fail to pay as agreed.

While these laws provide further regulations that reputable foreclosure experts must now follow, the foreclosure scam companies will continue to do whatever they can to take advantage of homeowners in foreclosure. Many of the worst of these companies do not even bother to research the relevant foreclosure laws and rely on homeowners to fail to gather their own foreclosure information. In essence, they rely on their own ignorance of the law and the foreclosure victims' ignorance in order to prey upon homeowners. This presents a unique opportunity for legitimate foreclosure investors and companies to fill this void by educating foreclosure victims on what can be done to stop foreclosure legally and effectively.

The vast majority of homeowners in foreclosure would like to keep their home if a suitable solution was presented. The idea of being set out on the street with nowhere to live and no opportunities to improve the lives of their own children causes great anxiety and scares homeowners to the point of trusting a scam to take care of their problems for them. Investors who are able to educate homeowners and structure a deal that is in the best interests of all involved are able to provide these homeowners with local solutions to stop foreclosure that will give them the best opportunity to repair their financial lives and get out of debt. Obviously, this deal will have to be a win-win situation for both the investor and foreclosure victims, but any win-lose or lose-lose situation will not provide either party with a long-term solution to the problem. Being honest with homeowners in foreclosure about their options and educating them on what will happen before, during, and after the foreclosure process is often the most effective way to come to a mutual understanding of the benefits of any plan to save a home.

There are many possible solutions to help homeowners save their homes from foreclosure, including ownership partnerships, trust agreements, and land contracts, to name just a few. Structured correctly and reviewed by all parties and their legal counsels, these can be very successful in putting an end to the foreclosure process. The most commonly used solutions are rental agreements and leaseback options, which give homeowners the possibility of living in the property and making rent payments until they have significantly improved their credit and can qualify to purchase the home back. Sometimes, these options will result in lower payments for the homeowners, as investors can often qualify for lower interest rates and pass those savings along to the foreclosure victims, which provides them with the best chance of eliminating debt and starting a savings plan.

By carefully considering a legal and mutually beneficial method to stop foreclosure, both homeowners and investors can provide each other with important benefits. Investors will be able to acquire a new investment property, improve their own credit scores, and make income from helping the foreclosure victims. Homeowners, in turn, will be able to avoid foreclosure without the loss of their homes, be able to remain living in their house, have an opportunity to repair their credit, and eventually repurchase the property, completing the process of financial recovery. In addition, educating homeowners on how foreclosure works and what causes it will allow communities to learn how to prevent future foreclosures and build a knowledgeable local population on guard against various foreclosure scams, who will not rely on the government to protect homeowners in financial hardships.

Two of the more common foreclosure scams online come from various companies that take advantage of homeowners and from attorneys who use their respected position to urge foreclosure victims to make the wrong choices about how they can save their homes. While there are often news stories of homeowners being stolen from and tricked by shady investors who show up at the last minute, there are just as many companies that do no work at all for foreclosure victims and lawyers who increase their fees to the detriment of their clients, who are experiencing legitimate financial hardships. The most tragic part of this is that so many of these scammers can be avoided, as long as homeowners receive unbiased foreclosure advice and research ways that they can stop foreclosure on their own.

Foreclosure scams are an unfortunate part of the foreclosure industry, as it would be better if no company or attorney preyed on foreclosure victims. This is a bit unrealistic, however, although most of these scammers know only slightly more about foreclosure than the homeowners themselves, which they use that knowledge to take advantage of the homeowners. This makes it important for every homeowner facing a financial crisis to take the time to educate themselves on how foreclosure works, what their state foreclosure laws are, and what options may be available to prevent foreclosure from taking their homes and leaving them with no place to live.

While foreclosure scam companies and attorneys can be quite despicable, there are a number of other parties that are just as irresponsible throughout the foreclosure process. For example, it is just as disturbing (possibly even more so) that public schools are unable to teach students even basic financial concepts and how to use their money effectively so that they know how to establish an emergency fund and learn how a mortgage works. There are few personal financial courses even in colleges, leaving the vast majority of citizens unprepared for the onslaught of credit card offers, low teaser interest rate mortgages, and other financial temptations. In fact, credit card companies have active agreements with universities in order to hook their students into the debt trap from the time they are legally able to receive a line of credit.

If required financial education in schools is too concrete, as opposed to the abstract subjects now being taught, then it is just as despicable that homeowners are never taught how to think critically about their own lives and the long-term effects of decisions they make. New home buyers and refinancing clients are just told to sign on the line to get a loan they will not be able to afford, and when, in a year's time, they can not afford it, they trust someone just as shady to help them out of foreclosure. It is just too bad that trusting people without gaining any knowledge is just going to land these homeowners in the same position of relying on others to live their lives for them, or actually put them in a worse position, with a bankruptcy or repayment plan that is too expensive, or by having their home stolen out from under them entirely. And these results are entirely avoidable, if homeowners researched relevant foreclosure information or knew how to manage their finances.

The banks design the loans to take the houses through foreclosure after a period of time, and then the foreclosure scam companies and attorneys just further the cause of the mortgage companies. They give homeowners false hope based on unearned trust, and the homeowners often get burned, and lose their homes. Of course, there are some great foreclosure help companies and attorneys, as well, which is why we make every effort to find the most respected foreclosure help sources. Not every person in the foreclosure industry is a scam artist and a large number of homeowners receive help every day to stop foreclosure and keep their homes. But there is no question about the existence of unscrupulous foreclosure helpers -- and homeowners who do some research about foreclosure are often better able to spot the scammers, which is another goal of our site: to educate homeowners and provide relevant foreclosure advice to help them save their homes on their own.

Many homeowners in foreclosure feel lost and completely uneducated about how the foreclosure process works and how they can save their homes. Receiving enough foreclosure advice to fully understand the situation should be their first step, even before they are formally served with foreclosure papers. It is only when foreclosure victims know what to expect that they can avoid the various scams operating in the industry and find a real solution to avoid losing their homes.

Far too many of these foreclosure scam operators trick homeowners into sending them hundreds of dollars at a time in exchange for vague promises of "foreclosure help services," or "loss mitigation options." These companies collect all of their fee before doing any work for the foreclosure victims, and then provide absolutely no services to their clients, only to recommend that they file bankruptcy to stop foreclosure at the last minute. This is usually done when the sheriff sale date is coming up very shortly. When they are turned down at the last minute, the homeowners may have no other options to prevent the sheriff sale from taking their home.

This is one of the main reasons that homeowners should educate themselves about the basics of the foreclosure process and what methods can be used to prevent foreclosure. They should not trust anyone just to provide them with this information in exchange for nothing, so it is important for homeowners to research whatever they can on their own. Remaining ignorant of the foreclosure process puts the foreclosure victims in much greater danger of falling prey to a foreclosure scam who may leave them even worse off than when they started, in addition to wasting valuable time and money that could be used in the pursuit of a legitimate way to avoid foreclosure.

Every homeowner facing the possibility of foreclosure needs to gather as much foreclosure information as possible and evaluate what options are available for saving their home. Then they can make every attempt to remove themselves from the foreclosure process. Foreclosure victims can educate themselves on how to put together a forbearance agreement, how to qualify for a foreclosure loan, and every other option. The banks will not provide the homeowners with this information, so it is wise for homeowners themselves to gain the education needed to stop foreclosure.

Missing a scheduled mortgage payment is a huge deal for homeowners: they will receive collection calls incessantly, foreclosure scammers will crawl out of the woodwork offering magical potions, and the situation can spiral downward from there. Homeowners, though, can take back control of the situation and end their reliance on receiving help from everyone else besides themselves. The best way for any homeowner to stop foreclosure is simply to learn how foreclosure works and what solutions are available, and then work on a solution until the house is saved or there are no options left.

One of the most common feelings that homeowners in foreclosure experience is an overwhelming sense of bewilderment in regards to the entire foreclosure process and what solutions are available. Searching out the most relevant foreclosure information is one of the best ways for homeowners to get started saving their homes, and should be done as soon as they know they will miss a mortgage payment. By knowing what to expect and how the process works, foreclosure victims can put together a real plan to save their homes and avoid any possible scams.

Some of the most prevalent foreclosure scam tricks is for certain companies to convince the homeowners to send them hundreds of thousands of dollars in exchange for a vague promise of "foreclosure consulting services" or "loss mitigation solutions." The worst of these companies collect money from the foreclosure victims up front and then provide no services that will help the homeowners stop foreclosure on their homes. At the last minute, they will recommend the homeowners file bankruptcy to save their homes and stop the sheriff sale, which is usually scheduled very close in the future. When this happens, the foreclosure victims may have no other options left to prevent from losing the home to foreclosure.

Scams like this and others are the most important reason that foreclosure victims need to gain an awareness of how the foreclosure process works and what can be done to stop it. Blindly trusting someone they have never met to help them will only ensure that the homeowners are taken advantage of somewhere along the line, and may end up in a worse situation than ever before. They will be in greater danger of losing their money and their home after being taken advantage of by a foreclosure scam company. And the amount of time that is wasted can never be recovered and used to pursue a legitimate solution to foreclosure.

Every family in danger of losing their house to foreclosure should seek out as much foreclosure advice as they reasonably can and research what options can be used to save their home. Once they understand the process, they can put together a plan to end it. Just a few solutions that may apply in various situations are loan modifications and hard money loans, among others. Homeowners also should not trust their banks to make them aware of these various options to stop foreclosure, as many mortgage company representatives do not know about these solutions themselves.

When homeowners miss their first mortgage payment, the proverbial Rubicon has been crossed: they will begin to receive hourly phone calls from the mortgage company, foreclosure scams will target them for their snake oil solutions, and the financial situation can get out of control very quickly. Foreclosure victims can reassert their control, though, and educate themselves to prevent from being taken advantage of. The best method for any homeowner to stop foreclosure is to learn more about how the foreclosure process works and what can be done to solve the problem, and then pursue a number of reasonable solutions until the house is either saved, or they have decided that they can not save the house.

Many homeowners in foreclosure feel lost and completely uneducated about how the foreclosure process works and how they can save their homes. Receiving enough foreclosure advice to fully understand the situation should be their first step, even before they are formally served with foreclosure papers. It is only when foreclosure victims know what to expect that they can avoid the various scams operating in the industry and find a real solution to avoid losing their homes.

Far too many of these foreclosure scam operators trick homeowners into sending them hundreds of dollars at a time in exchange for vague promises of "foreclosure help services," or "loss mitigation options." These companies collect all of their fee before doing any work for the foreclosure victims, and then provide absolutely no services to their clients, only to recommend that they file bankruptcy to stop foreclosure at the last minute. This is usually done when the sheriff sale date is coming up very shortly. When they are turned down at the last minute, the homeowners may have no other options to prevent the sheriff sale from taking their home.

This is one of the main reasons that homeowners should educate themselves about the basics of the foreclosure process and what methods can be used to prevent foreclosure. They should not trust anyone just to provide them with this information in exchange for nothing, so it is important for homeowners to research whatever they can on their own. Remaining ignorant of the foreclosure process puts the foreclosure victims in much greater danger of falling prey to a foreclosure scam who may leave them even worse off than when they started, in addition to wasting valuable time and money that could be used in the pursuit of a legitimate way to avoid foreclosure.

Every homeowner facing the possibility of foreclosure needs to gather as much foreclosure information as possible and evaluate what options are available for saving their home. Then they can make every attempt to remove themselves from the foreclosure process. Foreclosure victims can educate themselves on how to put together a forbearance agreement, how to qualify for a foreclosure loan, and every other option. The banks will not provide the homeowners with this information, so it is wise for homeowners themselves to gain the education needed to stop foreclosure.

Missing a scheduled mortgage payment is a huge deal for homeowners: they will receive collection calls incessantly, foreclosure scammers will crawl out of the woodwork offering magical potions, and the situation can spiral downward from there. Homeowners, though, can take back control of the situation and end their reliance on receiving help from everyone else besides themselves. The best way for any homeowner to stop foreclosure is simply to learn how foreclosure works and what solutions are available, and then work on a solution until the house is saved or there are no options left.

The problem of scams in the foreclosure industry is a very broad topic and one that has been discussed over and over again in news stories and articles. But each description of a scam only provides more evidence that a problem exists, without analyzing where the problem comes from, or how homeowners in foreclosure can protect themselves from being taken advantage of. The exposure of foreclosure scams after the fact does very little to help most homeowners avoid the same or similar tactics practiced by other unscrupulous con artists.

Scammers often target homeowners in foreclosure for a number of reasons. Chief among them is the fact that most foreclosure victims are woefully uninformed about the entire foreclosure process and how their own mortgage works. Despite the fact that it may take only a few hours for homeowners to have a firm grasp of these issues, they put their trust in a virtual stranger who appears as if he has the magical secret that will help the homeowners stop foreclosure. In reality, the scam operator has little more knowledge than what the homeowners could learn on their own through an hour or two of internet searching.

Foreclosure scams also capitalize on the homeowners' unwillingness to call the lender and simply explain the problem -- these homeowners believe that someone else will be able to communicate with the lender where the homeowner was unable. In most cases, though, the mortgage company would rather work with their clients first, before any other third party is involved. But the scammer knows that many homeowners are afraid that they will be berated and threatened by the lender, so they avoid calling at all.

It is a clear sign of how far community and interpersonal communication and bonding have broken down in the modern world, that homeowners are afraid to speak with their mortgage company, so they put their complete trust in an indifferent stranger who professes to know the secrets of the universe and can magically stop foreclosure. The homeowners are far too trusting, and the foreclosure scam operator far too morally bankrupt for any progress to be made. And the lender is clearly guilty as well, of doing to their customers exactly what the homeowners are afraid of. They constantly call, threaten their clients with the loss of their homes, and generally focus on the single issue of money to the detriment of their own reputation and respectability.

Even further alienating everyone involved from each other is that, very often, the foreclosure victims, lender, and foreclosure scammer will all be operating in different states in the country. Homeowners are first afraid of someone that they have never met and will never meet, so they put their trust in someone else that they have never met and will never meet. And they expect the other two parties, who have never met and will never meet, to patch up the original problem. Is it any wonder why these arrangements so often break down and the homeowners lose their homes and a good amount of their money and a significant amount of their time?

And what is it that discourages the homeowners from doing the research on their own, to find the relevant foreclosure information that would show them exactly what to expect, what to do, and what to avoid? Simply typing "foreclosure advice" or" foreclosure information" into a search engine will give any foreclosure victim potentially hundreds of hours of reading that they can engage in to learn exactly what they can do to save their homes from foreclosure. There is no lack of free foreclosure help resources available, and foreclosure victims should take full advantage of these at every opportunity.

Foreclosure victims unwilling to face their fears and gain the appropriate knowledge may want to reconsider their decision to own a home in the first place. If they can not take the time to research their own situation and how they can repair it, and would rather blindly trust someone to fix their problem for them, then it would probably be best for them to move back in with their parents, or become wards of the state. Unwillingness to take personal responsibility and unwillingness to attempt critical thinking to gain understanding are two huge barriers to success for any homeowners who wants to stop foreclosure on their homes. Most importantly, though, they are barriers that are easily conquerable.

There are a lot of questions on how homeowners can protect themselves from being taken advantage of by unscrupulous foreclosure scam companies. While the main points have been repeated ad naseum by everyone else, this post is focused on a few of the most important ways that foreclosure victims can ensure that they are being dealt with fairly and have the best chance of receiving a beneficial solution to stop foreclosure.

The most important point is for homeowners to understand every piece of paper that they are asked to sign. Sales contracts may contain hidden clauses, stacks of meaningless paperwork may contain a quitclaim deed, and workout programs may state a higher payment than the homeowners can afford. If any of these are the case, the foreclosure victims can find themselves in even greater danger of losing their homes. Most of the horror stories online about foreclosure scams describe homeowners who are "sweet talked" by someone into giving up their home or thousands of dollars, only to find out later that they signed away all their ownership rights in their own home. Therefore, it is very important for homeowners to read and make sure they understand everything they are getting into.

Another point is for homeowners to make sure they can afford the payments on their new plan to stop foreclosure. Even if they are planning on refinancing in a few months or selling the home, a large payment on a forbearance agreement that stretches the budget, combined with another minor hardship, will put the family right back into foreclosure. If they can not afford to keep their home, it may be better to work out an arrangement to sell the home or give the bank a deed in lieu of foreclosure, rather than agreeing to a plan that is destined to fail in the end.

Finally, when working with an investor to put together a plan to stop foreclosure and keep the home, it is important for homeowners to protect their interest in their property. This may mean executing a contract that is recordable with the county or having an attorney review all of the documents to make sure that the investor has no ability to take the property back from the homeowners, unless they stop making their payments again. In addition, the payments should be very clearly spelled out in the agreement, and should be a payment that the homeowners agree to and can afford for the length of the contract.

Thus, homeowners can avoid most of the common foreclosure scams by just looking out for their own interests, and making sure they are protected. It is unfortunate that, so often, homeowners will trust whoever pretends to be more knowledgeable than they are, regardless of the circumstances. In most cases, homeowners who are applying for a foreclosure loan or repayment plan know a lot more about the foreclosure process than many of the companies and individuals they are dealing with. Most homeowners who simply read our foreclosure advice section will know more ways they can save their homes than the average foreclosure help company representative. It is vital for homeowners to get over their own fears of losing their homes and become active participants in the plan to stop foreclosure. After all, no one loses more in the situation than the homeowners themselves.

Our post yesterday looked at the fact that many foreclosure scam companies will post negative or inaccurate information about other foreclosure help companies that they feel are "competing" against them. In fact, though, foreclosure specialists who attempt to dissuade homeowners from looking at other options are most likely just trying to make sure the foreclosure victims do not receive real help to stop foreclosure or save their homes. These companies isolate themselves and attempt to isolate their potential clients, so that they can better take advantage of the homeowners. They may steal homes, steal money, and steal others' material to help them steal homes and cash.

Another way that homeowners can be tricked by shady foreclosure scam companies is the fact that scammers will often steal copyrighted, useful information from good foreclosure help companies and publish it as their own original work. In that way, the foreclosure victims may be persuaded that the foreclosure scam is making relevant foreclosure advice available; however, they are actually receiving original, useful foreclosure information second-hand in a bastardized version.

For example, we recently found our original foreclosure e-book posted on someone else's website as a "Free Foreclosure Booklet." Our names had been messily "removed," and the thief's credentials had been inserted instead. In fact, the original version of the book contains a list of known foreclosure scam companies -- but the scam thiefs who took our book removed this list. Why? Our only conjecture is that they may have been on the original list of scams and had an interest in removing their names from the list of known scammers and republishing the book as their own material.

Obviously, homeowners should be aware of and avoid practices like this. The goal in the foreclosure industry should be to help homeowners stop foreclosure -- not steal from other sites and trick homeowners into believing that copyrighted material is their own. Foreclosure specialists whose only goals are to put negative information out about others and then steal their work can never hope to be successful in providing homeowners with mortgage help; in fact, they will probably never be successful in life in general. This is not the type of help that homeowners in financial hardships need to save their homes.

Foreclosure victims who want real, original foreclosure help resources can feel free to download our foreclosure e-book. Any other bastardized version of the book on any other websites are certainly unauthorized copies being peddled by potential foreclosure scam companies. Even if the companies are not scams, any homeowner should have serious reservations against working with a foreclosure company who steals works from other sites. If they steal our book from us -- they may steal your home from you. And they've already established a pattern of stealing, altering work, and claiming that it's their own.

Foreclosure scam operations can be very difficult for the average homeowner facing a financial hardship to identify and avoid. While there are some clear signs of scams, such as asking for several thousand dollars up front, not stating a refund policy, or asking a homeowner to sign blank or undated documents, one of the best indications of foreclosure scam operators is simply their negativity and unwillingness to treat anyone (clients or other companies) with the level of respect or care that they deserve.

There are many good, hardworking people in the foreclosure industry who are actively trying to provide homeowners with much-needed foreclosure advice and assistance. From loss mitigation companies, to private investors, to real estate agents, to mortgage brokers, and just plain old foreclosure information providers or attorneys, there is a wealth of resources and expertise that foreclosure victims can tap into. Many of these foreclosure specialists have even developed mutually beneficial business relationships with one another in order to trade information, refer clients that they can not help to trusted partners, and share in the great feeling of seeing a homeowner successfully save their homes from foreclosure.

Unfortunately, though, there are also foreclosure scam companies who try to take advantage of homeowners. The ways that they can do this are too numerous to list in one single article. Due to the nature of their business, most of them operate in virual isolation from the rest of the foreclosure industry. Some of them even go so far as to say bad things about every other foreclosure website and foreclosure help company, in an effort to put others down and give themselves a false sense of credibility. They do this by comparing their company in a favorable light to any number of other companies, regardless of what services they provide and the success of each of the other companies' methods.

Most homeowners would probably do well to stay away from companies who make unsubstantiated claims about other foreclosure service providers. There is a real difference between pointing out verified, reported foreclosure scams, that have been covered in detail by news organizations and prosecuted by state regulatory agencies, and merely providing a list of the competition and using negative labels or descriptions in juxtaposition with glowing reviews of the one preferred company.

In another blog entry recently, we told homeowners that, in order to stop foreclosure, they simply do not have the time to waste to find "the best" foreclosure help company. They need to look at foreclosure companies as a sick patient looks for a doctor: find the one that can cure the illness as quickly as possible with the least amount of recovery time. Honestly, there is no "best" foreclosure service provider -- not us, not anyone else, not anyone who calls themselves "the best." However, this is a community of foreclosure specialists who engage in a mutual exchange of information when attempting to help as many of their clients as possible. And, on the other hand, there are isolated foreclosure scam operators who attempt to dissuade foreclosure victims from seeking help from any other potential source for foreclosure advice and assistance.

In fact, our site, ForeclosureFish.com, has spoken with and established friendly professional relationships with some of the best, most dedicated, hardest working foreclosure service providers in the industry. To the very best of our knowledge, they all are active in providing homeowners with the most effective "medical advice and cures" for every foreclosure situation. Some of them provide mortgages, real estate services, loss mitigation services, self-help packages, or legal counsel. We do not consider any of them our "competition;" we consider them our first sources to help us help our clients stop foreclosure in any way possible. And, obviously, there are untold numbers of other great foreclosure companies that we have not yet come into contact with.

Special thanks goes to Justin Lee from SaveMeFromForeclosure.com for providing the inspiration for this current post. We've known Justin for nearly a year now, and he is one of the excellent people in the foreclosure industry who are providing homeowners with real help when they are facing foreclosure or are behind in their mortgages.

One of the problems with foreclosure is that homeowners who are behind in their payments invariably end up the targets of massive mailing and phone call marketing campaigns from foreclosure help companies who are offering their services. With so many scams out there, though, it becomes very difficult for foreclosure victims to know who to trust when they need additional assistance in their efforts to stop foreclosure.

Homeowners may receive upwards of several hundred post cards, letters, or phone calls every week from potential foreclosure service providers and experts. Before working with any of these companies or individuals, it is important to do enough research on the service providers and the methods that they use to help homeowners save their homes from foreclosure. There are a number of ways to complete this due diligence, such as searching online, calling the Better Business Bureau, and contacting the state attorney general to determine if a pattern of complaints exists.

However, it is also important to be aware of the fact that not every foreclosure help company will be trustworthy, regardless of what their current reputation may be. In fact, we are aware of a number of foreclosure scam companies who, as soon as they receive a complaint from a consumer, immediately shut down their current business and simply change the name of the company, change the website, and use different contact information. They then appear to have a pristine record with the Better Business Bureau and regulatory agencies, even though they are actually a fly-by-night foreclosure scam.

Another pitfall that homeowners experience when working with a foreclosure service provider or loss mitigation consultant is having a constant sense of doubt about whether the home will be saved. If the client does not believe that the company can help them, then there is no real relationship between the foreclosure company and the foreclosure victim, and the chances for being able to stop foreclosure drop dramatically. This is one reason why homeowners should do enough research on the loss mitigation company or service provider that they work with, and interview several companies to find the one that they feel most comfortable working with.

As cliched as it may sound, the best advice for homeowners after they have done all of their homework may be simply to trust their gut feeling about the foreclosure company they work with. They may not end up being taken advantage of by working with one of these companies, but if they intuitively feel that the company can not help them, then the company will most likely not be able to achieve the desired results and save the home from foreclosure.

For homeowners who want to utilize a do-it-yourself approach to saving their homes, our ForeclosureFish.com membership may be appropriate, in addition to a number of other products and services offered online. Various reports, educational materials, form letters, and packages are available through numerous sites online, and can all contribute to foreclosure victims being able to get the right amount of mortgage help and foreclosure advice that they need to be able to save their homes and stop foreclosure on their own.

The most important parts of any plan to save a home from foreclosure is to learn as much as possible about how foreclosure works, what options may be used to stop foreclosure, and which mortgage help companies really can provide the homeowners with the assistance they are looking for. Negligence in any of these areas is a quick way for the homeowners to find themselves taken advantage of by a predatory foreclosure scam company. In foreclosure, the best offense is always a good defense.

An old online post regarding the actions of a foreclosure scam company was forwarded to us recently. The woman who made the post claims to be a victim of this foreclosure relief company's particular scam. It's quite a long post seemingly addressed to the president of the company, but let's take a look at certain parts of it that may give us some clues to what happened to make the homeowners into former homeowners.

The foreclosure scam company in question was one of the numerous "private investor groups" that purchase homes out of foreclosure. Many of them purchase the homes, tell the homeowners to leave, and resell the properties at profit. The worst of them, though, don't tell the homeowners they will have to move out, telling them they will be able to remain in the home and pay rent. Once the deal is closed, though, the homeowners are swiftly evicted and the home is sold at a profit.

"I was working with [employee name] and sent $900 to save my home and begin the refinance process."
This is in contrast to the fact that the company did not offer any kind of foreclosure refinance program, did not have a valid mortgage license in any state, and any charges were clearly stated as application fees (a claim made by other former clients of this company) -- not "save my home fees," which do not exist.

"I had 3 weeks before my sheriff's sale."
Three weeks before a sheriff sale is usually not enough time to work out a foreclosure refinance, especially when the company did not have their customers fill out mortgage applications or provide any documentation of income. Be very careful when a company asks you to pay money to "get the ball rolling," and then doesn't ask for a corresponding stack of financial paperwork to evaluate your abilities to come up with a monthly mortgage or rent payment.

"I called repeatedly and left messages for [processor's name] personally and with the processing department for almost 3 weeks (past the sheriff's sale) no one would return my call."
A bad sign already, especially if the homeowner can't get in touch with the rep who is in charge of "processing" the file. Usually, if you can't get in touch with the person or department in charge of handling your case, then assume you have been turned down and start looking for another option to save your home. Never give up on the original company, even if it's just to get your money refunded from them, but if you are being ignored -- there is usually a reason.

"The sad thing is that I checked on your company. I looked up the Better Business Bureau and read all your testimonials."
Most foreclosure companies have testimonials on their websites from happy families who saved their homes even though they thought they had lost their homes. Testimonials aren't worth anything, and anyone can write them. Let's try an exercise right now in writing a foreclosure testimonial: "I was two weeks away from losing my home, and my rep from your company was able to talk to my lender and help me save my home. Now I'm in the process of rebuilding my credit, and I got to keep my home. Thank you for all of your help." See, that was easy, and if we can do it, so can many foreclosure relief companies. Don't fall for testimonials that you can't verify; too many testimonials are fake.

"Your company did nothing for me but cause me to lose my home because of lack of communication, consideration, and bold-faced lies."
This is, in fact, what many foreclosure relief companies specialize in: avoiding phone calls, doing little work for their clients, and lying straight to their clients about what actual work has been done with their files.

"I also can pull phone records of all the times I called the processing department, which was sometimes 3 times a day and always left a message."
Again, if you are leaving numerous messages every day with the company you are working with to stop foreclosure, then you most likely have a serious problem. Find alternate solutions immediately.

It is unfortunate that this client lost the home and was evicted. The company took advantage of her as much as possible, telling her they were working on the file when nothing was being done with it. The homeowner trusted the company on no basis whatsoever, and believed every lie that was fed to her, and that is possibly the worst part of the whole situation. Without basic financial education about the foreclosure process, homeowners will not be able to stop foreclosure, as this woman found out the hard way.

Ok, so this may not be the largest foreclosure scam in the world, but we felt we had to share some of this story after reading about some of the operations of this company, who shall go nameless to protect the innocent, and because litigation may be pending. For homeowners in foreclosure, please make sure you know what you are agreeing to when working with a foreclosure help company. It may mean the difference between being able to stop foreclosure, and losing your home completely.

The company operated throughout much of the year 2004, and was a nationwide firm that promised to help homeowners save their homes by "refinancing" through a private investor. The fee was 10% of the value of the home. So, for example, the fee for a $100,000 home would be $10,000. Ten percent of this amount, or $1,000, in this case, would have to be paid up front. For the foreclosure victims to begin the process of saving a home through this company's program, they would have to send in a check for $1,000.

The only problem was that, after the money was sent in, the company never did anything else for the homeowners. The company would leave the clients on hold for hours at a time, not return phone calls, and ignore voicemail and email messages. This process would continue for a period of months before the client was finally turned down. The reason: they company had "presented the file to all of their investors and they all turned it down." No other reason was given for the rejection, and everyone who requested a refund was never sent anything.

Eventually, after stealing nearly $1 million dollars from various homeowners, in amounts of $150 up to $12,000, the company had accumulated enough refund requests and complaints from the BBB and state regulatory agencies, that they were finally shut down. However, the owners of the company quickly took all of the money left in the business and fled town. The regulatory agency tried to freeze their assets, but were unsuccessful, and the owners were never heard from again.

The most insidious marketing that the company did was through its explanation of the costs for their services. They went through as many possible leads as they could, and said their fee was tens of thousands of dollars, and that they only charged a small portion up front. This tactic tricked many homeowners into believing that they could save their homes with only a small amount of money up front, compared to the total cost of the program, and would pay for the bulk of the services through their equity.

In addition, the company would also state that, while the service was not guaranteed, no one was ever turned away unless they had given substantially inaccurate information in their initial applicaion. In most cases, this was the excuse given to homeowners who were rejected, because in foreclosure situations, legal fees, interest, and late fees tend to pile onto the sum of the mortgage. Also, very few homeowners can give a 100% accurate value of their home, without having an appraisal. Any mistake in these estimations would result in the foreclosure victims being turned away and forced to save their homes some other way.

Through extensive radio and internet advertising, the company was able to defraud foreclosure victims out of nearly $1,000,000, over a period of less than a year. The owners have not been brought to justice or forced to pay back any of the money that they stole. While they have been banned from doing business in certain states, they were able to escape with hard cash from innocent homeowners who ended up losing their homes as a direct result of this company's efforts to trick them out of their hard-earned money.

Numerous complaints about them are still online, with innumerable former clients stating the same offenses over and over again on different public forums. The foreclosure scam company was also featured several times on TV news reports, and these reports are still available through an online search.

In order to stop foreclosure, you should do as much as you can on your own, and learn about the various ways that foreclosure scam companies trick homeowners. Many of them go even further than this company did, by actually evicting homeowners out of their own homes, after they promised to help the foreclosure victims. All of these consequences could have been avoided if the homeowners had known how to save their homes and had known more about their situations.

Our foreclosure e-book also contains more free information on the ways that different foreclosure scams operate, as well as names a few of the more serious offenders of the previous years. Knowledge is your first defense against being taken advantage of, and our e-book has been designed to help you save your home from foreclosure on your own.

Do any of these messages sound familiar?

-I own my own bank. I have doing FC bailouts for 13 years. I can help you get your equity and stay in you home at the same time. Call me.

-If you are serious about saving your home and credit a good friend of mine can help you. Send an email and I will have my friend send another one back with his contact info.

-My boss is an ethical person, and is very good at forclosure bailouts.

-PLEASE CALL ME AS I AM A LENDER THAT CAN HELP YOU GET OUT OF FORECLOSURE. CALL ME.

-PLEASE GET IN TOUCH WITH ME, AS I AM A LENDER THAT CAN HELP YOU REFINANCE AND GET YOU OUT OF FORECLOSURE AT A LOW 2.4%.

-PLEASE CALL ME FOR MORE INFORMATION WHICH DOESNT OBLIGATE YOU DO ANYTHING.

They should sound familiar, as all of them came from actual marketing emails that some of our clients have received from foreclosure companies who offered their "services." Many of our clients who are behind in payments or in the actual foreclosure process may receive large amounts of marketing materials from, literally, dozens of these "foreclosure help companies." While there are some great companies and individuals who help homeowners work out a solution to stop foreclosure, the vast majority of these companies are mainly trying to take advantage of the foreclosure victims in whatever way possible, either by stealing their homes, or charging them thousands of dollars up front for vague promisies of "servcies" that will magically be performed once the homeowners pay up.

These unscrupulous foreclosure spammers usually attempt to send out as much of their promotional material as they can, until they find the few homeowners who are undeducated and gullible enough to fall for their tricks. The foreclosure victims typically end up in much worse situations than they were in before they were contacted by these individuals or companies.

The first problem is that these foreclosure spam emails contain material that is exactly what the homeowners are looking for: "LOW 2.4%" rates, "stop foreclosure right in its tracks," save the home, smaller payments, hocus-pocus, etc. They also make sure to mention that the messages are coming from reputable companies, as in "a good friend of mine can help," and "My boss is an ethical person." Usually, individuals that immediately approach someone with a "just trust me!" attitude are the very people that should never be trusted.

Messages like these that are sent to homeowners by foreclosure spammers are really no different from the endless spam of cheap drugs, make money from home with no work, trackback spam, comment spam, and nonsensical gibberish that is already clogging most foreclosure victims' Inboxes and internet browsing experiences. Unfortunately, for homeowners who are desperate to save their homes, they may fall victim to some of these emails. One of the best ways to find an actual, reputable company or investor to work with, is to call them, interview who you will be working with, and look for an investor or foreclosure service provider that is as local as possible.

But if it's just "easier" to work with someone through email and fax, then why bother putting in the enormous amount of effort required to save the home in the first place?

The recent slowdown in the housing market has caused a marked increase in the number of news stories relating to foreclosure and, by extension, to various foreclosure scams. Almost one half of all the news stories about the market conditions and foreclosure in particular are aimed at warning homeowners of the potential for abuse by unscruplous scammers. It is a sad commentary on the state of mortgage education that so many homeowners are unaware of the ease with which criminals can steal their homes.

One of the most common scams involves tricking people into signing over the deed to their homes, in exchange for "fast cash," "equity funding," or a similar offer. The sad fact is, however, that these offers for cash are nothing more than attempts by scammers to have homeowners sign over their homes for a nominal price. The scammers take advantage of the homeowners' apparent ignorance and to understand what the paperwork they are signing actually states regarding their homes.

Many news stories are also taking a more careful look at the increase in "foreclosure rescue services," and the scams associated with these companies, which also attempt to trick homeowners into signing over their homes. Once the scammer has stolen the home and recorded the new deed, they can collect rent payments, telling the homeowners that they are using it to pay the mortgage, or even evict the homeowners who no longer own the home. If this happens, the scammers can rent the house out to another family until the eviction process is completed, thereby being directly responsible for the eviction of more than one family.

A simple search of any news site, such as Google News, or Yahoo! News, yields numerous similar stories detailing various scams that former homeowners have become victim to. If homeowners are behind in payments on their mortgage, the best protection is gaining knowledge of the foreclosure process and how best to stop foreclosure. Idly remaining uninformed is the single best way to lose the home, all of the equity, and a good portion of your life savings.

In fact, the only possible defense against losing the home to foreclosure is to learn how foreclosure works and how to stop foreclosure. Homeowners who do not know any better have sent thousands of dollars to criminals or have signed over their homes, only to be evicted shortly thereafter. This is a high price to pay for ignorance, and a price that is entirely avoidable.

A few basic tips to remember when attempting to stop foreclosure is to read what you are signing, or have competent legal counsel examine the documents, make sure you are obtaining a solution that is affordable, and, most importantly, examine all of your options to stop foreclosure and avoid scams.

The most common complaint from foreclosure victims is that they feel they are in the dark about their situation and are not informed enough to stop foreclosure. Education about the foreclosure process should be the homeowners' first priority after missing multiple mortgage payments. Only by understanding the foreclosure process can they avoid scams and save their homes on their own.

It is unfortunate, but true, that many foreclosure scam companies trick homeowners into sending hundreds or thousands of dollars to provde mysterious "foreclosure assistance" services. The money is collected up-front, and the scam company proceeds to do nothing for the client, turning them down or recommending bankruptcy at the last minute, with a foreclosure sale date quickly approaching. When this happens, the homeowners may not have enough time to stop the sheriff sale.

However, the homeowners should be able to avoid falling prey to scams by informing themselves of the ways that foreclosure works, and what options are used to stop foreclosure. No one will provide this to the homeowners, so it is up to them to find the information on their own. If they do not learn how foreclosure works and can be stopped, they are much more likely to become victims of foreclosure scam companies who leave them in worse situations, by taking hundreds or thousands of dollars from their victims; money that could have been used to pay the mortgage.

Thus, it is vitally important that foreclosure victims learn what is happening to them, and what options they have to save their homes. Only after obtaining a basic understanding of the process should homeowners attempt to stop the foreclosure process. They will know how to work with their lender to negotiate a repayment plan, what the qualifications are to refinance, and what else can be done to save the house. Most mortgage companies do not provide their employees with detailed foreclosure knowledge, so a basic understanding on the part of the homeowner will help tremendously when working out a solution to foreclosure.

Once the homeowners miss their mortgage payment, the world changes for them: collection calls every day from the lender, potential scams calling or sending postcards, and a general sense of helplessness sets in. However, the homeowners can stop the foreclosure without relying on third party help from companies that they are unfamiliar with and whose sales tactics they do not understand. The most effective way to stop foreclosure is for the homeowners to learn all they can about the foreclosure process, first, and decide on a solution, second.

With the increasing number of foreclosure scams that are discovered and exposed on a weekly basis, it is important for homeowners to be able to spot "red flags" of companies and individuals that may be trying to steal from the homeowners. This post doesn't focus on specific scams, how they operate, or what to do to get a refund. Instead, this post explores three of the main ways scammers may try to take advantage of their clients.

Signing blank documents. No matter who you are working with to stop foreclosure, a blank document that you are to sign should raise immediate concerns. You never want to sign blank documents, as you won’t know what they will be used for until it is too late. You may sign away the deed to your house, authorize another lien to be placed on your home, or give a criminal power of attorney over all of your financial matters. Someone who is trying to steal your home can easily have the documents witnessed and notarized in your absence, making them appear official. If this happens, a closing can take place where your property is sold without you even being aware of the sale.

Powers of attorney. Signing over power of attorney to someone should be done only in extreme situations, if ever. In almost all cases, you will need to maintain control over your home and what happens to it, and giving someone power of attorney effectively transfers your control to that person. Do not let anyone else make decisions about your property without your knowledge and consent. You should always retain the right to revoke any decisions or actions made by the attorney. However, it is usually best never to give anyone power of attorney over your home in the first place.

Outright criminal activity. This section covers a wide variety of actions you may witness. The main characteristic, though, is usually someone requiring large sums of money up front before they will provide you with any services at all, whether it is an investor, attorney, or loss mitigation company. Be very, very careful of sending anyone money if you are in foreclosure. The problem with paying for services before they are provided is that you have no way of knowing if the services will be performed adequately, or at all. Many foreclosure help companies will ask you to send thousands of dollars to them, or as much as one month’s mortgage payment, just to begin their services and have them review your case. Until you have determined exactly what the services are worth, you should never send anyone money because, in almost all cases, their services are worth nothing to you.

With the downturn in the real estate market in full swing, more homeowners are finding that they are unable to stop foreclosure by simply selling the house. Home values have fallen, making refinancing another option that homeowners no longer have available. Nearly all of the recent news relating to foreclosure has been focused on helping these homeowners avoid the various foreclosure scams that have begun appearing in large numbers, as criminals target the high valued asset of real estate.

These news articles have begun detailing one of the more well-known scams, which involves tricking the homeowner into signing over the deed to the home in exchange for an offer of cash or an equity loan. The fact is, though, that these scammers take over ownership of the home and pay the homeowners an incredibly small price. The foreclosure does not end, and the homeowners are eventually evicted by the new owners, the scammers, or the bank once the house goes to sheriff sale.

Another scam that is appearing in the news more often is that of "foreclosure rescue service" firms. These companies also trick foreclosure victims into signing over the deed to their homes, and promise to pay the mortgage. However, the homeowners are charged rent, which goes straight into the scammers' pockets, are evicted, and then another family is moved in, also to be evicted once the foreclosure process has completed. In this way, the foreclosure scam is responsible for two families ending up without a home, rather than just one.

The sheer number of these types of news articles is amazing, considering that they are the result of poor consumer education regarding how the real estate market and their own mortgages work. If a homeowner is facing foreclosure, then the best defense would be to learn more about how the foreclosure process works, rather than trust a third party who may not have the best interests of the homeowner at heart, and who will actually benefit if the house if foreclosed.

It is this ignorance that homeowners have to fight against even more than their lender. Ignorance of how to stop foreclosure legitimately has cost homeowners thousands of dollars and the loss of their homes to unscrupulous foreclosure scam companies. The loss of a home to a scammer is much too high a price to pay for remaining ignorant of how foreclosure works.

If homeowners are in a hardship situation and are in danger of foreclosure, the best bet would be to follow a few basic guidelines: understand any documents they are asked to sign, never sign away the house unless a sale is taking place, never send money up front for vague "services" which may never be performed, and know all of the options that can be used to stop foreclosure.

Many victims of foreclosure feel that they are in the dark about their situation, and lack the education necessary to foreclosure scam companies that operate in the mortgage and real estate market.

All to often, uneducated homeowners end up trusting a scam company to help them work with their lender or provide other mysterious services. Many times, the company takes money up front, does nothing, and leaves the homeowners to fend for themselves a few days before the property is sold at auction. When this happens, the homeowners need to act very, very quickly to postpone the foreclosure process or they run the risk of losing their homes in a matter of hours or days.

This entire situation, and the extra stress of being turned down at the last second, can be completely averted by the homeowners gaining a basic education of the foreclosure process. The scam companies will obviously not provide the homeowners with this vital education, as they try to get the homeowners to send them money for services that are either unnecessary, or ineffective. The homeowners will invariably left in a worse position after losing several hundred or thousand dollars to the scam that could have been set aside to reinstate the mortgage.

The avoidance of scams is just the simplest reason that homeowners in foreclosure need to learn their options and how they can stop foreclosure on their own. Of course, education should not be considered a substitute for action, but having a basic awareness of the foreclosure process can help homeowners understand how they can save their homes most effectively. The homeowners will also be able to negotiate with their lender and speak intelligently about the issues. Most representatives of mortgage companies do not have detailed instruction regarding how foreclosure works.

The reason homeowners are so often confused about the foreclosure process is the fact that, as soon as they miss a mortgage payment, the entire world changes for them. The mortgage company starts calling daily, threatening the homeowners with the loss of their home, and never explains what options may be available to stop the foreclosure. Having an awareness of how foreclosure works will help the homeowners work with their lender, understand their available options, and avoid the loss of thousands of dollars to unscrupulous foreclosure scam operators.

The best way to stop foreclosure is simply to know all of your options, and find out how the foreclosure process works. The complaint we've heard most from foreclosure victims is that they feel they are in the dark about what is happening to their homes. They don't know when the sale is, how far behind they are, or why the legal fees are so expensive.

In fact, many homeowners end up trusting a "foreclosure assistance" company to help them and end up sending these companies hundreds or thousands of dollars. When nothing happens and the homeowner is denied any further help from the foreclosure scam, the victim may find that there are only a few days left before the sheriff sale of the property. At this late date, there are several options to stop the sheriff sale and stop foreclosure, but the chances of success, unfortunately, decline quickly.

It is unfortunate that this entire situation could have been avoided if the homeowners trusted themselves, rather than a company who may have a financial interest if the house is lost, and certainly has no financial interest once the homeowners have paid the for useless services up-front. Paying for mitigation services before they are performed can put foreclosure victims in a much worse situation if the bank negotiations do not work. The homeowners may be out thousands of dollars that could have been used to pay back the mortgage.

Obviously, this is just one reason why homeowners should take the little amount of time necessary to learn the basics of the foreclosure process. Granted, mere education will not magically stop foreclosure, but it can help homeowners understand what they are getting into, what the chances of success are, and what the consequences for each option are. And having this amount of real estate education will put the homeowners on equal footing with their lender and other foreclosure companies, whose representatives may also have only a passing awareness of the foreclosure process.

Foreclosure victims are often in the dark about their situation, and confused about why the world seems to change as soon as they miss a payment. But learning about how the mortgage and real estate industries pursue foreclosure is one of the best steps a homeowner can take to stop foreclosure. Knowledge also provides great insurance when faced with a potential foreclosure scam. Homeowners will be able to see through the scammer, avoid the loss of their homes, and stop foreclosure in the most effective way possible.

Today, we got a call from a former client of a foreclosure scam. Hopefully, sharing this story will help anyone reading this blog realize the enormity of the criminal activity that goes on in the foreclosure relief industry. Only by being aware and knowledgeable can you hope to avoid all of the unscrupulous individuals and companies that are only trying to harm you.

Again, we recommend that you should do all you can to stop foreclosure on your own, and never use a third party to get involved unless you have already tried saving your home yourself. This story should be an example of why we recommend this.

The victim of the scam was facing the possibility of sheriff sale in early March, 2006. He contacted a number of possible foreclosure assistance companies and was finally "sold" by one of them which was run by a certain woman. To begin the process, he was required by the scammer to send $2,000, as a "retainer" for future services, including loss mitigation and locating a lender. The victim sent $2,000, by certified funds.

After being called and given daily updates on the status of his file, the victim believed that the scammer was working hard for him. The scammer said she was contacting the bank, trying to stop foreclosure for the client, and attempting to work out an affordable repayment plan. The client believed all of this and trusted the scammer to do all of the work for him, even though he kept receiving phone calls and letters from his lender and their attorneys, and the property seemed to be slipping further into foreclosure.

Once the property reached the end of the line and was going to sheriff sale, the scammer had the nerve to contact her victim and try to wring more money out of him. Horribly, she convinced the victim to send her another $7,000, via wire transfer. According to her, she was going to take the $7,000, fly to the corporate office of the client's bank, hand them the $7,000, and establish a repayment plan on the spot.

If this sounds utterly incredible, it should. The client ended up sending the scammer a grand total of $9,000, over a period of a few months. And what did he get out of his $9,000, investment?

If you guessed less than nothing, you would be correct. The sheriff sale went through. The property was sold back to the lender. The client was publicy humiliated by being physically evicted from the property in front of all of his neighbors. The $9,000? It has another story. In fact, a couple of stories.

Story I. When the client finished wiring the second payment of $7,000, and the payment plan was not established, the victim reasonably asked what had happened to his money. The scammer first told him that the employee who had been entrusted with depositing the $7,000, had never returned from the bank and had walked off with all of the money.

The only problem with this story is that a wire transfer does not require a physical deposit of the funds. It was transferred directly into the scammer's bank account. This story didn't last long.

Story II. The scammer told her victim that the money had been stolen from her office, as a result of a burglary. This also proved to be false, as the scammer could not keep her facts straight, and, most blatantly of all, no police report was filed.

After spewing out lies and giving her client the run-around, the scammer finally stopped communicating at all. The client would call and not be spoken to, have his phone calls go straight to voicemail, and would not be called back. The last attempt was for the victim to send a letter via Certified Mail, stating all of the facts of the case and that he was demanding his money be returned to him. He even offered to accept partial payments of the $9,000, paid over a number of months.

This letter was returned to the client unopened. The scammer never even bothered to pick up the letter from the post office and refused to sign for its receipt.

And what happened to the $9,000? Where has it gone? What has it been spent on? These might be impossible questions to answer... except for one fact: on the scammer's voicemail, she states that she will be out of town in Las Vegas for the holidays.

How many expensive meals can be bought in Las Vegas for $9,000? How many hands of blackjack? How many Cirque du Soleil shows?

How many times will the scammer be able to insert another quarter into a slot machine, all because she tricked someone into sending her $9,000? Thirty-six thousand times. She will have thirty-six thousand chances to win the jackpot in Las Vegas. And if she loses all thirty-six thousand times, she can just continue scamming desperate homeowners whose trust she gains.

Don't let your holidays be ruined by some scammer who takes your money, lies to you until the sheriff evicts you from your home in front of your neighbors, and has a grand old time in Las Vegas spending your money, while you're trying to find some way to make the holiday season cheerful again.

Just take responsibility, learn how to stop foreclosure yourself or work with a third party without being screwed, and give yourself the gift of continued homeownership this Christmas season. No one else will be able to give you that gift, and some people, as sad as it is, will even try to take away the gift.

These are the two most common foreclosure scams that can be found online. A simple Google search for any number of foreclosure-related terms will result in literally hundreds of results of foreclosure scammers offering one or more of the following two foreclosure relief services. The services these companies provide can invariably be performed by the homeowners themselves. There is absolutely no reason to pay a company hundreds or thousands of dollars to stop foreclosure when a homeowner is able to do it on their own for free or much cheaper than these scammers charge.

Pointless mitigation services

Many scam artists have found that the best way to take advantage of homeowners is to provide them with services that they would be better off doing themselves. A company calling themselves “loss mitigation experts” or “hardship program specialists” will never provide foreclosure victims with a service that they can not do on their own. Furthermore, the lender would much rather speak with the homeowners personally, rather than a loss mitigation company. It is the obligation of the homeowner to take responsibility for their loan and send money to pay the mortgage; the lender will not prefer to speak with anyone besides the actual homeowner when working out a repayment plan to stop foreclosure.

Case reviewers and consultants

This scam is one of the most devious out there, because these criminals will offer to review a homeowner's situation for an up front fee and will actually deliver on their promise. The catch, though, is that their review is 100% useless and their recommendations usually have nothing to do with the current foreclosure situation. Homeowners should absolutely read the agreement that they are being presented with before they allow a consultant to review the case and provide them with pointless recommendations. We have seen so-called “work agreements” that specify the case reviewer will do such worthless tasks as recommending improvements to the property, conducting an onsite walk through of the property, and helping the client clear up inaccurate credit report information. None of these actions have the first thing to do with helping a homeowner stop foreclosure and save their home. In fact, until a foreclosure victim has found a solution to foreclosure, they should not even consider improving the property. And if they have sent money to a consultant who has done nothing helpful, they should request a refund immediately.

In our foreclosure e-book, Theft of the American Home, we detail an incident in which our affiliate company helped a homeowner who had been scammed get nearly $700.00, refunded to her from the scam company. A small portion is reproduced here:

This company sent a devious letter to Maria and her family with the intention of tricking them into believing the letter was sent directly by Maria’s original lender. A copy of the letter is shown here in Fig. 1.1 (not pictured here, see book ). As you can see, the company does not give their name or phone number until the very end of the letter, but mentions the client’s lender several times. The body of the letter is designed to deceive the reader into thinking that the “Loan Recovery Program” is being offered by Intervale Mortgage Corp., Maria’s original mortgage company. A fictional “Loan Recovery Department” is even listed, along with hours of operation and a phone number to call.

Unfortunately, this homeowner was tricked into sending Scam Company No. 1 a check for $675.00. Once they received her money, they did absolutely nothing that their letter stated. A special forbearance was not structured, and Maria’s payments were not placed on the back of the loan. The owner of the property never received any proof that the company even attempted to contact the lender, and the scammers stopped answering Maria’s calls shortly after they received payment.

When the client contacted Adama about obtaining a refund, Adama immediately began researching the company, recognizing it to be a scam. A search through the Better Business Bureau online database revealed the location of Scam Company No. 1, phone and fax numbers, and the owner’s name and email address. Also, a history of complaints was discovered, with a number of former clients apparently requesting refunds when no work was done on their case.

The next step for Adama was to research every consumer advocacy group and regulatory agency that the client could submit her complaint to. These entities included the BBB, attorneys general, departments of real estate, the Federal Trade Commission, and the NAACP. The president of the scam company was then called and Adama verbally requested a refund on behalf of Maria, the owner of the property. The president responded by saying a refund would not be sent to the client and proceeded to hang up on the manager from Adama. A letter was then written, giving Scam Company No. 1 a deadline for refunding the payment, and the letter was sent to the president of the company. If no refund was received by Maria and her family by the end of the deadline, the numerous complaint letters would be mailed out. (A customizable version of this letter is included in Appendix B of the book Theft of the American Home.)

After this exchange, the company refunded the $675.00 in full. The owners now had an additional $675.00 to fight foreclosure that they thought they had lost to a company that turned out to be nothing but a scam.

Apparently, another homeowner in foreclosure has been victimized by Foreclosure Assistance Services. A Denver affiliate of ABC, The Denver Channel, reports the story of Debbie Grace, who was mailed a brochure from Foreclosure Assistance Services.

Unfortunately, this report illustrates the consequences of trusting a company who tells you that they will take care of everything for you. As The Denver Channel story states, “Foreclosure Assistance told her to stay out of the way. She said they told her not to call lawyers or the mortgage lenders and that they were going to do all the work. ‘They were going talk to the mortgage company and talk to the lawyer ... but the girl couldn't tell me (what they would say.) She said we've got to get this paperwork filled out and then we can go from there,’ Grace said.” No one should ever trust any company to deal directly with their lender or their attorneys.

When the homeowner gave FAS all of her trust, she allowed them to take advantage of her. When they told her not to contact her lender or their attorneys, they knew they were going to do nothing for her, and that’s exactly what they did. According to Grace, FAS said “we'll help you save your house and that's what I was trying to do. They wanted $1,000.” Not surprisingly, though, the company did nothing for Debbie and she lost her house.

Thankfully, there was a somewhat happier ending than there could have been, as Foreclosure Assistance Services refunded Grace’s payment, after she complained to the bank her credit card is with.

However, never trust anyone to be the sole negotiator between you and the mortgage company. Unless you hire an attorney, no one has the authority to make any serious decisions about your loan besides yourself and the lender, or their attorneys. Also, as we have warned over and over again, be very careful about sending money up front to anyone until you know exactly what you are paying for.

Scams are a permanent fixture in the foreclosure industry. Learn how to fight back if you have been a victim of one.

If you have been taken advantage of by a foreclosure scam company, then you may feel helpless and violated. It is hard to imagine that people would target and steal from homeowners who are losing their homes. Unfortunately, it happens on a daily basis all over the country. Any simple search of news articles will prove this. But there are ways to fight these companies, get back the money and some of the time you have dedicated towards them, and make sure they never take advantage of you or anyone else again

Your first priority should be saving your home, but the money you sent to the scammers can and should be used to help you achieve that. You can not afford to waste hundreds or thousands of dollars on companies who promise to help you and then begin giving you the run-around and stop taking your calls. So if you've found that you sent money to a scam, you should request a refund and not give up until they have complied with your request.

The first person you should contact about a refund is the president or owner of the company who stole your money. You can plead your case to him or her, but do not expect to get results. Many owners of scams are not willing to part with the money they have tricked you into sending to them. However, you should call them with your request so you can inform other agencies of your attempts to resolve the situation. Remember to put your refund request in writing and give the company a set period of time to send your payment back to you.

If the scammers do not send you a refund in the time you have given them, then the next step should be contacting their state and your state attorney general. There is usually a department handing consumer fraud cases, and you should forward your complaint to them. Make sure you also include any documents and correspondence from the company you are complaining about. This means you should send documentation of phone conversations, emails, and a copy of your faxed request for a refund. Also let the attorney general know that the company is targeting homeowners in foreclosure and that you are in more danger of losing your home after dealing with this company than you were before. The attorney general can investigate the company, sue them, shut down their offices, order them to give you a refund, and imprison or fine the owners.

Depending on the type of transaction and the activities the scam company was to perform, you should forward your complaint to a number of other regulatory agencies. Every state has a department that regulates banking, mortgage and real estate transactions. Look them up online and contact them regarding your refund request. They will be able to help you or can forward your concerns to the correct department. Hopefully they will be able to get your refund and shut down the company that took your money. There are also federal agencies, such as the Federal Trade Commission, Office of the Comptroller of the Currency, FBI, and your local representative of Congress.

While these actions may result in getting your money back, filing a complaint with your attorney general or applicable state and federal regulatory agency will not prevent other homeowners from being taken advantage of, unless they shut down the company and imprison the owners. In order to protect others in your situation, make sure that the company's reputation is affected. This can be done in three ways: complaining to the Better Business Bureau, informing local news stations, and telling your story online in discussion groups and forums.

Filing a complaint with the Better Business Bureau can be done either online or in writing. While the Better Business Bureau does not have regulatory oversight over any company, they will review your complaint and forward it to the company. The company will then have to respond to your refund request, and you will be able to tell the Better Business Bureau if their response adequately answered your request. If a number of complaints are received, the BBB can alert state and federal regulatory agencies, deny the company's membership, and list the details of complaints in the company's report.

If you know of other clients who have been taken advantage of by the scam company, you may want to contact your local network news affiliates (ABC, CBS, NBC, FOX ), and tell your story there. They may run a feature on your situation and let their viewers know that the company is tricking people out of their money or homes. News stations may become especially interested in your situation if you have also filed complaints with the attorney general.

The last option for ruining the scam company's reputation involves posting your experiences online. By posting in public forums or starting your own website that exposes the company, your story may be seen by hundreds or thousands of potential customers. In fact, your story may show up right next to the company's official website in search results, warning all visitors that the company is stealing money and is currently under investigation by the attorney general and other agencies. Posting on internet forums is a great way to warn others about scams, and no company likes to see negative information about them online.

Foreclosure scams all across the country are discovered on a daily basis. Just in the past week several have been reported on in the Chicago Tribune and the L.A. Times.

The Chicago Tribune ran a story this past week titled ”Man Admits Bilking Those Facing Foreclosure.” The story details an individual scammer, who called himself John D. Cash, Jr. and Typhon Ra, who used one of the most common scams listed in our foreclosure e-book, which involves both investor and debt collection scams. The man would promise to delay “foreclosure for his clients,” and “provide them with free and clear titles to their homes within two years.” In reality, according to the story, the man would only attempt to delay the foreclosure in order to pocket as much of the clients’ monthly payments as possible.

The most likely way this scam works is that an investor persuades a borrower in default to sign over the home, promising that this will make the investor liable for the monthly payment, which he will collect from the homeowners and forward to the lender. This is nothing but a scam and a lie, as signing over the deed to a home does not relieve the original borrower of their responsibility to pay their mortgage. The scammer will sit on the house, collecting payments and waiting for the home to go into foreclosure. Once the home sells at sheriff sale, the purchaser at the sale will own the property, clearing all other names off the title. In this way, the criminal investor can pocket tens of thousands of dollars; in this case, John D. Cash stole nearly $190,000 from unlucky homeowners.

The L.A. Times also ran an article on foreclosure scams as recently as yesterday, November 5, 2006. The story focuses on the equity skimming scam, also detailed extensively in our foreclosure e-book, and how it is used in conjunction with equity sharing programs. Equity sharing works when homeowners purchasing a home will find “private investors willing to share the cost of the home in return for future appreciation.” While this practice has led to more buyers qualifying for loans, this same technique has been criminally twisted by some immoral investors. Investors may persuade homeowners to sign over the deed to their homes and charge rent on a monthly basis. The problem comes when the former homeowner can not afford the higher monthly payment and “the investor ends up with the title or rent payments — sometimes both.”

In response to scams like these and numerous others, the Mortgage Bankers Association of America “has unveiled a consumer education campaign called Stop Mortgage Fraud in an attempt to help prevent scams and predatory lending.”

If you feel you have been taken advantage by one of these scams, or any other scam, you need to request a refund and protect yourself right now. Contacting a lawyer or regulatory agency is one of the best ideas you may have at this point. However, remember that saving your home should be the number one priority if you are in a foreclosure situation. While scammers should not be allowed to get away with their actions, you must find a way to stop foreclosure.

ForeclosureFish.com is dedicated to providing you with the most up-to-date news on foreclosure scams and any new discoveries of scammers and their devious techniques. As new scams are discovered, we will post them on our foreclosure blog, as well as our dedicated scam page.

Every single day I read stories about foreclosure "investors" who are tricking unfortunate families out of their home and their equity. I would classify these people as "criminals", not investors.

These bastards look for the most unfortunate people they can find and proceed to steal their home and/or their savings. They pretend to offer you help, but in reality, they plan on tricking you into giving them money, or signing over your house to them. Even worse, some of these criminals have even opened up a school for teaching others how to take advantage of people in your situation!

Here are three easy steps to help you avoid getting scammed:

1. Don't talk people who show up at your door. (This seems obvious, but many people are so desperate that they will listen to anyone who claims to offer help)

2. Never sign anything you don't completely understand. Read every single line of a contract or agreement. Never rely on verbal agreements; everything discussed should be in writing.

3. And always remember, if something sounds too good to be true, then it probably is.

If you need help, or if you have been scammed by someone in the past, visit http://foreclosurefish.com and request help today.