Avoid "Mortgage Rescue" Scams
For a homeowner facing the frightening threat of
possible foreclosure, the offer seems too good to be
true. A "mortgage rescue" company steps forward,
claiming to be able to help you save your credit and
your home.
In some cases, the "mortgage rescue" company
provides phantom help offering to work as an
intermediary with lenders, collecting an up-front
fee for services it never provides or that
homeowners easily could have done on their own for
free.
In other scams, the "mortgage rescuer" may offer
to pay off the delinquent loan and allow homeowners
to stay on as renters, with the possibility of
buying the home back later. But the scam artist
doesn't make the payments and the homeowners, who
have signed over their deed, end up losing the home
and any equity they had in it.
Homeowners facing possible
foreclosure to be careful of scams, particularly
in Illinois' larger metropolitan areas. If you are falling behind on mortgage payments:
- Contact your mortgage lender immediately to
see if the loan can be restructured or
refinanced before you are delinquent on your
payments for three months and formal foreclosure
proceedings have begun.
- Contact a HUD-certified housing counselor
who can walk you through your options.
Homeowners also might want to contact an attorney
about legal options or a local REALTOR® to get more
information regarding fair market housing values in
the area.
Illinois Law Requires "Rescue" Companies Provide
a Written Contract
Illinois did institute tougher guidelines on
"mortgage rescue" companies with the Mortgage Rescue
Fraud Act in 2007. The law requires that "rescue"
companies give homeowners a written contract, which
the homeowner can cancel at any time, listing the
services they will perform before being paid. In the
case of a home sale, a written contract also is
required and the "mortgage rescue" company must pay
the homeowner at least 82 percent of the fair market
value if the rescue fails.
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