Keep an eye out for foreclosure scams

The prospect of losing one’s home is frightening. Texas homeowners have options for potentially avoiding foreclosure, but it is not uncommon for scams to be confused with legitimate opportunities. So-called rescue scams target homeowners who are struggling financially, offering what may seem like instant relief. Not only do these scams further harm those in financial distress, but they rarely help homeowners actually keep their properties.

One such scam involves an offer to pay off the overdue portion of a mortgage and purchase the property. Once the homeowner agrees to the sale, he or she signs the deed to a third party. The scammer will then tell the homeowner that he or she can rent the property and simply buy it back in the future. Unfortunately, that homeowner will probably never be able to do so.

This is usually for one of two reasons. The scammer may set an unaffordable rent and then evict the former homeowner when he or she cannot keep up with payments. The scammer may also choose to keep rent at a reasonable rate, but then set an unaffordable purchase price if the original homeowner wants to buy the property back. In both situations, the homeowner loses both his or her equity and home. Sometimes the original homeowner is still on the hook for the original loan.

There are several legitimate options for dealing with foreclosure. For example, a loan modification changes the terms of one’s loans, lowering the monthly payment to a more reasonable amount. It is also possible to fight a foreclosure action in court. However, neither of these actions may prove that helpful if a Texas homeowner gets involved in a scam. Learning as much as possible about the foreclosure process and seeking guidance when necessary may help some homeowners avoid these types of scams.