Question:  I hear that even in the wake of the Madoff scam, there are still others who are trying to take advantage of investors and homeowners. Do you have any other insights?

A BuyandHolder

Dear BuyandHolder,

Answer: In this column, we like to keep you up to date about financial scams, including how not to be Madoffed. Click HERE to read. Now there’s a new one out there and although it’s not specifically related to stocks, bonds and mutual funds, it is one that very well may involve you or one of your friends.
 
It’s the housing foreclosure scam!

With many Americans facing the possibility of losing their homes, this has become the latest area for scam artists. They prey on the vulnerability of worried homeowners. Some “rescue” companies boldly state they can save your home. Others offer a money-back guarantee.

The scams basically involve collecting fees for phantom counseling or collecting mortgage payments that never make it to the lender. The fraudster simply takes your money and then disappears.

So, if you or someone you know is facing possible foreclosure, read on. Here’s what the Federal Reserve Board is advising.

(1) Work only with the right type of counseling agency

It should be on the Department of Housing & Urban Development’s (HUD) list of approved agencies. The list is at www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. Or, you can call 877-HUD-1515 for information.

Caution: If anyone claiming to be a foreclosure expert contacts you (by phone, mail, email), get his or her full name, office address and telephone number. Then check the information against the HUD list. 

(2) Understand the fees involved

The vast majority of HUD-approved housing counselors provide help with no cost involved; the remainder provide low-cost counseling.

Never work with a counselor who says he can negotiate a deal with your lender if you pay a fee first. Turn away those who only accept a cashier’s check or a wire transfer. Insist upon a written list of what services will be provided.

And, of course, you should be instantly on alert if you are told not to contact your lender and instead “leave everything” to a phony counselor or firm.

(3) Regard promises and guarantees with suspicion

Honorable housing counselors do not guarantee that they can prevent or halt the foreclosure process. A good counselor can boost your chances of keeping your house, but no one, absolutely no one can guarantee results.

Don’t be attracted by these come-ons:

“Stop Foreclosure Now”
“We guarantee to stop your foreclosure”
“We have special relationships with banks”
“We can save your home. Guaranteed. Free consultation”

(4) Get a professional opinion

Before you sign on, have your attorney or accountant review any documents you’re asked to sign. Be wary of signing blank forms – a sure sign of a scam. And never allow the so-called counselor to fill out forms for you! 

Con artists are adept at making desperate homeowners think they are signing documents for a new loan but instead you are actually signing documents that surrender the title of your house to the fraudulent counselor.

(5) Go for help

If you think a con artist may be targeting you, immediately talk with your lawyer and then report the incident to your state and/or local consumer protection agencies. You will find the nearest ones listed on the website of the Federal Citizen Information Center at: www.consumeraction.gov/caw_state_resources.shtml.