Avoid “Mortgage Rescue” Scams
For a homeowner facing the frightening threat of possible foreclosure, the offer seems too good to be true. A “mortgage rescue” company steps forward, claiming to be able to help you save your credit and your home.
In some cases, the “mortgage rescue” company provides phantom help offering to work as an intermediary with lenders, collecting an up-front fee for services it never provides or that homeowners easily could have done on their own for free.
In other scams, the “mortgage rescuer” may offer to pay off the delinquent loan and allow homeowners to stay on as renters, with the possibility of buying the home back later. But the scam artist doesn’t make the payments and the homeowners, who have signed over their deed, end up losing the home and any equity they had in it.Homeowners facing possible foreclosure to be careful of scams, particularly in Illinois’ larger metropolitan areas. If you are falling behind on mortgage payments:
- Contact your mortgage lender immediately to see if the loan can be restructured or refinanced before you are delinquent on your payments for three months and formal foreclosure proceedings have begun.
- Contact a HUD-certified housing counselor who can walk you through your options.
Homeowners also might want to contact an attorney about legal options or a local REALTOR® to get more information regarding fair market housing values in the area.
Illinois Law Requires “Rescue” Companies Provide a Written Contract
Illinois did institute tougher guidelines on “mortgage rescue” companies with the Mortgage Rescue Fraud Act in 2007. The law requires that “rescue” companies give homeowners a written contract, which the homeowner can cancel at any time, listing the services they will perform before being paid. In the case of a home sale, a written contract also is required and the “mortgage rescue” company must pay the homeowner at least 82 percent of the fair market value if the rescue fails.