FOX 8 Defenders: BBB warns of mortgage scams

Foreclosures are on the rise in Louisiana and so are the number of scams targeting troubled homeowners. In the past month, at least a dozen consumers have contacted the FOX 8 Defenders reporting mortgage help scams.

Times are getting harder for many homeowners. Realty Trac shows last August, one in every 1,208 Louisiana homes was in foreclosure. This June, that stat jumped up to one in every 948 homes.

The problem is the worst in the greater New Orleans area. Right now, 465 Jefferson Parish homeowners are being foreclosed on, 256 in St. Tammany and 242 in Orleans.
Right now, the foreclosure rate is at one of its highest points in three decades. Desperate homeowners are scrambling to save their property, which opens a window of opportunity for unscrupulous people.

The Better Business Bureau's Cynthia Albert says two different scams are especially popular right now among thieves; an advance fee loan modification scheme and a sales leaseback scheme.

In the loan modification scheme, Albert says someone will offer to negotiate a deal with your lender if you pay a fee up front, usually about $3,000.

"They normally don't do anything or they do just a bit. But it's not going to get you your home back," Albert said.

In the sales leaseback scheme, Albert explains the con artist is after the troubled homeowner's property, not just a few thousand dollars.

"They'll tell individuals who are having problems to turn their deed over to them. They say, "I'll let you live in your home. You can rent it. Then when your financial status is better, you can buy it back."

But Albert says the schemer either takes out another loan on the property making it too expensive for the homeowner to buy back, or sells it out from underneath the now former homeowner.

"Never, ever transfer your deed. Once you do, you're going to lose your home," she says.

Albert cautions homeowners to expect high pressure and lots of promises that sound comforting.

"They're going to guarantee you that you wont lose your home. They can't do that. It's an outright lie. They're not going to do it."

There are 8 signature warning signs, or red flags, that can tip you off to a potential scam.

Vulnerable homeowners should think twice if a company guarantees to stop the foreclosure process, collects fees before providing a service, or encourages any program that involves you buying your home back. Be aware of programs that offer to buy your home for cash, require a deed transfer or that offer to fill out paperwork for you. Albert says stay away from anyone who instructs you to send your mortgage payments to them instead of your lender or tells you not to contact your lender.

In fact, contacting your lender is the first thing a troubled homeowner should do. The Defenders have also checked out two non-profits that truly help folks who are behind on their mortgages: Consumer Credit Services and Homeowners Hope.

FOX 8 is proud to announce this week marks the one year anniversary of our partnership with the National Council of Jewish Women and the creation of the FOX 8 Defenders. If you have a consumer problem, call the Defenders at 1-877-670-6397.