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Beware of mortgage rescue scams

by Kim Cooper
| March 20, 2010 9:00 PM

A quick review of real estate classified ads reveals a growing number of short sale or foreclosure properties for sale. While these distressed properties present bargain hunting buyers with opportunities, they create an environment for sellers to be victimized.

According to Anthony Polidori, Supervising Examiner and Investigator for the Idaho Department of Finance, complaints in the state about foreclosure and short sale ripoffs increased by more than 100 in 2009 over 2008. Common sense would dictate that the number of complaints only reflect a percentage of the actual scams perpetrated.

Polidori says, "The most common complaints are regarding loan modification companies who require up front fees. These fees typically range from $2,000 to $5,000. The claims are from victims who received little to no services from these companies. If someone asks for a fee upfront, consumers should be very suspicious."

Folks who are delinquent on mortgages often react out of desperation and will do almost anything to save their homes from foreclosure. This can make them easy prey for opportunists looking to scam a quick buck. One such company, Apply 2 Save, operated locally for a period before being shut down by the department.

If you are in distress regarding your home loan, there are options. Ask for your lender's help. If you find you are unable to negotiate relief with your own lender, the Idaho Department of Finance (http://finance.idaho.gov) will provide names of licensed debt and credit counselors or regulated lenders who will provide legitimate assistance.

A nonprofit reported in an earlier story here is Neighborhood Housing Services Inc.

NHS is certified by the U.S. Department of Housing and Urban Development as a full-service housing counseling agency. Contact them by e-mail: home@nhsid.org. Their service is free.

Another type of scam is called "foreclosure rescue." These scam artists promise to save your home from foreclosure either for a fee, or by securing title to your property under their name. Often, the contract where you agree to the title transfer contains a clause where you are allowed to lease your home and buy it back at a later date. Sometimes the fee for "rescue" can exceed the total amount of your equity in the home.

Short sales present scammers with a different opportunity, called "equity skimming." In this operation the perpetrator submits a short sale offer which is less than the amount owed. They then locate a buyer who will pay more and closes the transactions simultaneously, pocketing the difference. This of course, cheats the seller and the lien holder of the property out of their equity. The equity in this case is the difference between what the perpetrator paid and what they received from the other buyer. In some cases, the scam artist persuades the homeowner to deed the property to a land trust where they are the trustee.

Mr. Polidori says that more and more, the complaints received by his office are from Realtors. This should give you some assurance that, if you are working with a Realtor, they should know about these scams and be able to help protect you from them. If a Realtor, or anyone else, suggests you pursue a remedy as described in the examples above, contact one of the free counseling agencies recommended by the Idaho Department of Finance.

If you feel you have been or are about to be scammed, contact the Idaho Attorney General (www.ag.idaho.gov) or the Idaho Department of Finance, (888) 346-3378.

To find a qualified Realtor or to search open houses and information regarding area properties, visit www.cdarealtors.com.

Kim Cooper is a broker and the spokesman for the Coeur d'Alene Association of Realtors. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664 with your questions or commentary.