Consumer Fraud Scam Alert!

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Scam 1: Bogus Foreclosure Help

Phony financial companies take advantage of desperate homeowners with promises of foreclosure rescue.

Because records of bank default are public, it's easy for scammers to find homeowners in trouble, then approach them via mail, phone, or e-mail, promising assistance. A recent Southern California case is a classic of one variety of the con: A couple paid more than $6,000 to a company that contacted them by flyer, promising to help them renegotiate their mortgage. Eventually they learned that the company had taken their money and done absolutely nothing.

In another version of this scheme, the scammer offers "private financing" for a loan or new mortgage. "As collateral for this money, he requires the homeowner to deed her property to him," says Jenny Brawley, a mortgage fraud investigations manager for the Federal Home Loan Mortgage Corporation. Then the scammer assures the homeowner she can stay in her house as a renter. Instead, he uses the deed to obtain a new loan -- which he pockets and doesn't pay off. The bank moves in to claim the house, and the fleeced homeowner loses her home and all her equity.

How Widespread?
Although no one has exact figures, the problem is so common that last year lawmakers in Oregon passed a bill requiring foreclosure consultants to make all fine print clear.

Fighting Back
If you're behind on your mortgage, don't avoid your lender -- in fact, contact the lender to see if you can work something out, advises Brawley. "Be suspicious of anyone who offers unsolicited help. Don't sign documents under pressure or without clearly understanding them. Never sign a document with spaces left blank. And be wary of any requirement that you must deed your home as collateral."

Turn 'em In
If you've been the victim of a foreclosure scam, report it by calling Freddie Mac's Mortgage Fraud Hotline at 800-437-2838. Also contact your state attorney general's office.

Continued on page 3:  Scam 2: Fake Sweepstakes


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