Foreclosed Homes Prevention Scams Proliferating
April 21st, 2009 by 
Joseph Smith
The rapid spread of the foreclosure crisis has caused devastation on the lives of many homeowners and still, many are scrambling to find a way to save their properties from foreclosures. And just as the desperation of distressed homeowners keeps on mounting, so is the number of scammers who offered their so-called services to rescue foreclosed homes.
Scammers are proliferating across the United States. Like sharks, they could smell their victims right away, targeting mostly homeowners in the pre-foreclosure stage.
According to California Deputy Attorney General Angela Rosenau, these unscrupulous people conduct their fraudulent activity by persuading distressed homeowners of foreclosed homes that they could help them negotiate with their lenders for reduced payments on their mortgage loans.
Most scammers are unemployed real estate agents who hawked subprime mortgage loans during the peak of the real estate market. Their modus operandi involves collecting advance fees, charging monthly payments or taking over ownership of foreclosed homes and filing for bankruptcy whereby suspending foreclosure proceedings temporarily.
According to Rosenau, swindlers are growing in numbers daily because banks and lenders that helped create the real estate bubble by initiating and securitizing subprime mortgage loans were slow in helping owners of foreclosed homes.
A study released by the State Foreclosure Prevention Working Group showed that out of 10 troubled subprime borrowers in 2008, only 2 were able to receive mortgage relief from banks and lenders.
Rosenau said that many owners of foreclosed homes became victims of scams because they got disappointed and frustrated over banks and lenders’ lack of interest to negotiate with them. And swindlers take advantage of this situation by approaching owners of foreclosed homes and offering their services.
Usually, scammers target homeowners who are in the pre-foreclosure stage because they tend to consider every offer of help that comes their way to avoid the trouble of going into foreclosures.
Meanwhile, President Barack Obama has been encouraging banks and lenders to modify mortgages under his $75 billion foreclosure prevention plan which was announced in March of this year. The foreclosed homes prevention program is expected to reach about 4 million troubled borrowers.
On the other hand, with the alarming rise of cases of foreclosure prevention scams, the U.S. Federal Bureau of Investigation has created a team to investigate foreclosure-related fraud.
Travis Yarborough, head of the team investigating foreclosure prevention scams, said that some of these unscrupulous people are getting creative in defrauding owners of foreclosed homes.
