Con Artists Prey on Desperate Homeowners

July 22, 2009

RICHMOND, Va. – A growing number of scam artists appear to be preying on desperate homeowners in Central Virginia who want to modify their loan or are facing home foreclosure.

“The possibility of losing a home to foreclosure can be terrifying. Some of these so-called foreclosure rescue companies only add to the nightmare,” said Tom Gallagher, president and CEO of the Better Business Bureau (BBB) in Central Virginia.

Many of these companies claim that they can help the homeowner save his or her home. Some are brazen enough to even offer a money-back guarantee.

One homeowner was told to send a $500 deposit. He followed later with a check for $3,000. He said the foreclosure rescue company did nothing and his money was never refunded.

Gallagher said the problem extends to those consumers who may be keeping up their mortgage payments but want to modify their loan.

“They’re sometimes told not to make their mortgage payment because the bank will be more sympathetic if they are behind. In at least one instance, the homeowners followed that advice, got no modification and ended up in foreclosure,” he said.

Gallagher’s office has already received nearly 3,000 inquiries this year about companies that provide local loan modification services. That’s triple the number received in all of 2008.

The BBB suggests that consumers avoid any business that:

· guarantees to stop the foreclosure process – no matter what your circumstances;

· advises you not to contact your lender, lawyer, or credit or housing counselor;

· collects a fee before providing any services;

· accepts payment only by cashier’s check or wire transfer;

· encourages you to lease your home so you can buy it back over time;

· tells you to make your mortgage payments directly to it, rather than to your lender;

· advises you to transfer your property deed or title to it;

· offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale;

· offers to fill out paperwork for you, and

· pressures you to sign papers you haven’t had a chance to read thoroughly or that you don’t understand.

People who may be facing a foreclosure notice should contact their lender immediately. They may be able to negotiate a new repayment schedule.

Homeowners facing foreclosure should also speak with a credit counselor at the Homeownership Preservation Foundation (HPF), a non-profit organization. HPF operates a round-the-clock toll-free hotline – 888-995-HOPE. The service is free.

To report fraudulent behavior on the part of foreclosure rescue companies, contact the BBB at or the Federal Trade Commission at 877-382-4357.

The BBB in Central Virginia serves Richmond and Tri-Cities, as well as 42 surrounding counties, from Fauquier to Mecklenburg and Northumberland to Amherst. The nonprofit organization was established in 1954 to advance responsible, honest and ethical business practices and to promote customer confidence through self-regulation of business. Core services of the BBB include business reliability reports, dispute resolution, truth-in advertising, consumer and business education and charity review.