The problems all started for Brevard, 47 (pictured left with her granddaughter), when she refinanced the three-bedroom, 2.5-bath rambler in New Carrollton, Md., that she had owned since 2001. When her new adjustable rate mortgage reset from just under $1,100 per month to about $1,500, the accounting specialist fell behind on her mortgage payments. By 2007, she was struggling to hold onto the home, where she lived with her granddaughter, her teen-age son and a daughter.
"People in those situations are vulnerable, and the scammers are always a step ahead," says Ed Jacob, executive director at the Neighborhood Housing Services of Chicago, which provides housing counseling to homeowners struggling with mortgage payments. "The sad truth is that Ms. Brevard's story is not unique," says Marietta Rodriguez, director for homeownership and lending at NeighborWorks America. "With the national foreclosure rate persistently high, more and more homeowners are falling victim to scammers who are openly taking advantage of individuals in difficult circumstances."
Brevard learned the hard way how scammers can take advantage of desperate homeowners. Here's her advice to help others detect foreclosure rescue scams so that they don't become victims, too:
1. Avoid businesses that advertise with fliers or solicit door-to-door
After falling behind in her payments, Brevard received a flier in the mail from something called "the New Start Program."
"It said they'd help you improve your credit so you can qualify for a lower interest rate loan," she told AOL Real Estate. "They said they would act on my behalf so that I would not be in jeopardy of losing my home."
Brevard contacted the agency, which seemed legitimate to her because it did not charge any fees for its services. Now she regrets that decision. "Anything that comes in the mail, I would make sure it is a state-approved program or one through the actual bank itself," she says.
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The agency asked Brevard to sign a statement authorizing it to talk to her lender about a new payment plan. What she didn't realize was that by signing the paperwork, she was also signing over the deed to her house.
Such "bait-and-switch" tactics are favorites of housing scam artists, who might say you're signing documents for a new loan to make your payments more affordable, when in reality they're documents that surrender the title of your house in exchange for a "rescue" loan.
Don't let a counselor pressure you to sign paperwork you haven't had a chance to read through carefully or that you don't understand. Also, don't sign any blank forms or let the counselor fill out forms for you. Be sure to talk with a state board licensed attorney before signing anything that transfers the title of your home to another party.
3. Be wary of the rent-to-buy scheme
Counselors she never met told Brevard they would lower her payments so she could clean up her credit history and later qualify for a refinance. Although her monthly payments were lowered to $1,100, she was sending payments to the scam artists, not to her lender. In effect, she was renting from them because they had refinanced her loan and held the deed.
Be wary of any program that asks you to surrender the title or deed as part of a deal to remain in your own home as a renter, even if it "guarantees" you can buy the home back in a few years. Scammers may tell you that surrendering the title will permit a borrower with a better credit rating to secure new financing to prevent the loss of the home, but buying back your home often becomes impossible. In a worst-case scenario, the new borrower walks off with your money, defaults on the loan, and you get evicted.
4. Work only with a HUD-approved counselor
After about two years of making the reduced payments to the New Start program, Brevard became suspicious and consulted a lawyer, who discovered that the counselors were not-HUD approved and that she'd fallen victim to a scam.
If you are approached by foreclosure counselors--by mail, phone, or in person--make sure the counseling agency you deal with is on the Department of Housing and Urban Development's list of approved agencies, or call 877-HUD-1515 for more information.
Most HUD-approved housing counselors provide no-cost counseling services and many more provide low-cost counseling, but they will not charge hefty upfront fees. Do not agree to work with a counselor who collects a fee before providing you with any services or who accepts payment only by cashier's check or wire transfer.
5. Hire licensed attorneys
Brevard hired an attorney to represent her to help her recover her funds and regain the deed to her home. She paid him a total of about $14,000 over a period of months to file documents and represent her in court. Court officials later told her that he never appeared in court on her behalf, never filed any documents, and in fact didn't even have a current license to practice law, as he had been disbarred before he took her on as a client.
"Here I am thinking he was taking care of the legal part of it, and one day I was here at work and my neighbor called me crying. All my stuff was in the front lawn. The bank had foreclosed and I had no idea that was happening," Brevard says.
When choosing a real estate attorney or other lawyer, check with your state bar association to see if the person is currently licensed to practice in your state or if there are any pending investigations. Be prepared to attend your court hearings, even if you have a lawyer representing you. Get a copy of your court file number so you can retrieve copies of documents at the courthouse or check on the status of a case online. Most states and counties maintain a public database that is accessible via the Internet.
"You think if you're getting a lawyer you're getting adequate representation, but you have to also check the lawyers out. You have to really do your homework," Brevard says.
6. If it sounds too good to be true, it probably is
Your foreclosure process is public information, and once the process is started, scam artists can pull information from databases that include the name of your lender, how much you owe and in some cases even the account number on your loan. All a savvy scammer needs to do is call you up quoting this information and claim to be acting on behalf of your bank. Make sure you keep track of the person's name, telephone number and an employee ID number, then call your lender from a number on your mortgage statement to verify if the person is legitimate.
"It's important for homeowners to know that what may look like a miracle may very well be a scam," says NeighborWorks' Rodriguez. "Knowledge is the best defense against this illegal activity, which is why it's critical that homeowners take advantage of the informational resources available to them from trusted sources."
7. If you're scammed
If you feel you may be the victim of foreclosure fraud, trust your instincts and seek help. For more tips on spotting scam artists, visit the Federal Trade Commission's webpage on foreclosure rescue scams. NeighborWorks' Loan Modification Scam Alert campaign also has a website, http://www.loanscamalert.org/, where homeowners can find tips and contact information for trusted resources in their area.
The bright spot for Brevard is she was able to recover the money she lost to the lawyer from a state program called the Client Protection Fund of the Bar of Maryland, and although she lost her home and all her equity, the foreclosure did not show up on her credit report because the deed had been transferred and the scammers had refinanced the mortgage out of her name. She now rents a home near her former one so that her son can finish high school with his friends
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