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Swindlers and Scammers Abound As Foreclosures Grow

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By : Leticia Carvalho    99 or more times read
As foreclosures get back to an upward trend after a temporary slowdown in December 2008 due to foreclosure suspension initiatives, the number of homeowners falling prey to scammers and swindlers also soars.

The swindlers create fly-by-night companies and market them as legitimate foreclosure rescue services with special connections to mortgage lenders. They create web sites similar to that of the Federal Housing Administration and the Hope Now program to make it appear that they have been given authorization by federal agencies to negotiate with lenders. They use television ads, distribute flyers and mail documents to inform troubled homeowners they can easily avoid foreclosure or reduce monthly payments if they avail of the companies' services.

The cases of California resident Maria Martinez and Illinois resident Carol McClelland illustrate how homeowners troubled by foreclosures are easily swayed by swindlers. Martinez said her desperation forced her to pay $1,000 to a company that promised to lower her monthly payments. McClelland says Foreclosure Solutions Experts called her after she was notified of foreclosure and promised to block the foreclosure and reduce her monthly amortization.

Ira Rheingold, head of the National Association of Consumer Advocates, explains that borrowers are forced to turn to sweet-talking brokers because their mortgage lenders refuse to negotiate with them or offer them repayment plans that they can not afford.

Attorney generals in California, Florida, Maryland and Illinois said the number of lawsuits against fraudulent companies and swindlers have been rising at an appalling rate. Angela Rosenau, a California deputy attorney general, cited over 300 complaints against fraudulent firms in 2008. Florida’s Attorney General Bill McCollum sued a firm that victimized more than 600 homeowners. Michelle Garcia, an Illinois assistant attorney general, said the lawsuit against Foreclosure Solutions Experts is just one of 22 foreclosure-related cases being investigated by the state.

To avoid being victimized, Marietta Rodriguez, head of housing programs at NeighborWorks America, says troubled borrowers should approach nonprofits and community organizations that provide foreclosure counseling.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.

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