How does a foreclosure rescue scam work?

The "rescuer" identifies distressed homeowners through public forclosure notices in newspapers, via the internet, or at government offices.

• The "rescuer" then contacts the homeowner by phone, personal visit, card or flyer left at the door, or advertising
• The initial contact typically centers on a message that tells the homeowners that they can stay in their house easily, get a fresh start, keep their credit rating or receive instant cash.

During the fist meeting, the unsuspecting homeowner is often told to stop all contact with lenders, credit counselors or lawyers and to let the "rescuer" handle all the details. This cuts off the homeowner's access to legitimate financial solutions and digs a deeper financial hole.

The scam artist generally looks to make a quick profit through fees or direct mortgage payments that are never passed on to the lender. Somethimes the scammer assumes ownership of the property by deceiving the homeowner.

Once it is too late to save the home, the "rescuer" either takes the property or the owner loses the home to foreclosure after it has been drained of equity through fees and charges.

What are the red flags to keep in mind?

• Calls itself a "mortgage consultant" or "foreclosure service"
• Contacts people whose homes are listed for foreclosure, including anyone who uses flyers or solicits for business door-to-door, by phone or email.
• Encourages you to lease your home so you can buy it back over time.
• Collects a fee before providing any services to you.
• Instructs you to cease all contact with your lender, credit or housing counselors, lawyer or other legitimate experts.
• Tells you to make you mortgage payments directly to him or his company (not the lender).
• Requires that you transfer you property deed or title to him or his company.
• Makes a promise that seems too good to be true, for example, instant cash with no strings attached.
• Tells you that as part of the deal you will need to move out of your house for some period of time for remodeling or other reasons.
• Offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale.