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How to spot mortgage scams

You know that feeling when you think things are so bad and you turn to someone for help, and they make matters much worse?

That is often the sad case when it comes to foreclosure scams. You’re in the middle of a financial crisis and reach out to a company that claims it can “rescue” you. But your “savior” is up to no good.

Here’s how that con game is played:

Beware of any third-party company that promises to modify an existing mortgage, warns one expert. “These offers are often made through the mail or telephone, and the person pretends to be representing your current mortgage company,” says William Francavilla, author of "The Madoffs Among Us: Combat the Scammers, Con Artists, and Thieves Who Are Plotting to Steal Your Money" (Career Press, $15.99). 

Even if they don’t pretend to be from your mortgage company, they could be “bad guys after your money who will ask for an upfront deposit with a ‘guarantee’ that if they don’t deliver, your money will be refunded," Francavilla says.

"Don’t believe them — they’re thieves,” he adds.

Understand that the power of what happens to your home during this crisis lies with the mortgage originator.

Be leery if a “fixer” tells you to stop paying your mortgage company and to drop all contact with it, and then asks you to send money to them as they will handle your affairs and get the money to your mortgage company. Good luck with that.

Another suspicious sign is if a company says it will buy your home and allow you to buy it back later. You can’t be certain you’ll ever get your home back.

Says Francavilla, “Don’t look for any financial lifeboat and hope it’s real. Get help from an attorney or financial adviser.”

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