Foreclosed Home Prevention Scheme Attracts Scammers
May 11th, 2009 by 
Joseph Smith
In February of this year, President Barack Obama announced a federal housing rescue plan with loan modification as the core tool to stop the increase in the number of foreclosed home. However, the effort has failed to produce the desired effect because of several hindrances, foremost of these is the emergence of scammers who take advantage of the desperation of homeowners.
Under Obama’s modification scheme, a distressed homeowner and lender will work out a scheme to alter terms of the former’s loan. These modifications may include lower interest rates or principal.
To support the loan modification scheme, free counseling services are made available to help distressed homeowners negotiate with their lenders. Scammers, seeing an opportunity to gain profit, have joined the fray by offering fraudulent services that aim to prevent foreclosures.
The scam artist will promise the troubled homeowner a way to save his property from repossession in exchange for upfront payment. However, the last time the homeowner will ever see the scam artist again is when he made the payment for a bogus service.
Industry experts believed that scams can be prevented if reforms will be made on federal and state regulations covering the loan modification scheme. They also believed that notable changes will be made in existing loan modification regulations, particularly in areas of appraisal guidelines, lending oversight, real-estate deal disclosures and loan-officer licensing.
Most of loan modification services that Arizona regulators receive complaints are operated like a call center with telemarketers bombarding a distressed homeowner with calls offering to help stop foreclosed home.
Some scam artists will falsely portray government counselors certified by the Department of Housing and Urban Development. Most of these fraudulent firms operate with business names similar to non-profit organizations in the housing market to confuse distressed homeowners.
Scam artists find their victims in scheduled foreclosure auction listings. After identifying their victims, they would contact them by telephone, emails or mails. They would offer their fraudulent services and make themselves sound as if they have the only solution to their foreclosure problem.
Scammers, who usually claim to have close contacts with lending institutions, target specific groups, including ethnic groups, elderly or soldiers.
To avoid becoming victims of scams, industry experts advise a distressed homeowner of foreclosed home to visit a government Web site and answer some questions that will determine if he is a potential candidate for a loan modification.
Another option for a distressed homeowner of foreclosed home is to contact his lender and negotiate for a loan modification himself.
