When an economic crisis hits – whether personal or national – there is a certain group of people who come out of the woodwork, just like cockroaches, scammers who want to separate you from your money. These days with millions of people struggling to pay their mortgages and millions more finding that their retirement funds have taken a hit, scammers are preying upon vulnerable consumers like never before.

Quite frankly, it takes an extra special amount of alertness on the part of consumers to avoid being scammed.

One area where scam artists are performing their dirty deeds is when it comes to home ownership. Because much of your personal information is publicly available, these crooks will often know that you are having financial problems and are waiting for the opportunity to give you their solution. Unfortunately, their solutions are meant to help themselves at your expense, possibly costing you hundreds of dollars or even the outright loss of your home.

Scam artists operate in a number of different ways, but they always work on your emotions to force you to make decisions that can bring you much harm. Let’s take a look at some of the methods scammers use to convince you that they are looking out for your good when they really aren’t:

Fear – Fear is a big motivator for people – we either fight or take flight. With their backs to the wall, some consumers make snap decisions, choices that they later regret. A scam artist will use the fear of you losing your home to convince you to sign away your home to them in exchange for some money. Each scam operates a bit differently from the other, but most likely you’ll give them the title to your home without receiving just compensation.

Ignorance – Ignorance of the law is no excuse for not knowing the law, but many homeowners simply don’t know their rights when it comes to home ownership and foreclosure. Some scam artists will try to intervene in your foreclosure, by offering a “white knight” solution which they say will solve all of your problems. Oftentimes, this involves extracting a fee from you – let’s say, $500 – which involves making phone calls on your behalf you can make for free. Worse, are those scammers who take your money and run.

Pride – Knowing that people who get scammed are often too prideful to admit that they were taken, scammers know that they can operate without impunity, going from homeowner to homeowner with their plans to extract money from them. Don’t let your pride get in your way – report a con job to the police and be prepared to file a complaint and testify in court if need be.

When con artists come a calling, they’ll offer to you a number of solutions including:

Telling you you’re in foreclosure when you are not. If you are behind on your mortgage payments, that doesn’t mean that you’re being foreclosed…yet. Contact your lender and find out where you stand and let them know you fully intend to meet your obligations. Don’t involve a third party (unless it is an attorney representing you) to tell you otherwise.

Offer to provide counseling. Personal business counseling is fine, but what are you getting for their advice? Moreover, what fees are being charged? Some financial counselors are legitimate while others are offering services you can do yourself, but for a fee.

Sign over the deed to them. Never sign your home’s deed over to another party, especially without having an attorney represent you. In addition, do not make payments to a third party as they may not be representing your lender. Again, contact your lender and remain in communication with them throughout your personal financial crisis.

Ultimately, if you are behind on your payments and have no way out, putting your home on the market could help you avoid foreclosure while also protecting your finances and credit. Never sign or do anything out of duress, recognizing that scammers will take advantage of your fear, ignorance, or pride to steal money from you.

Adv. — If you’re looking for additional consumer advice, please visit our sister site at SayLowerBills.com to find information about managing your income, handling debt, and other money saving tips.

Tags: con artists, consumer information, finance counseling, foreclosure, lenders, mortgage, personal finances, scam artists, scammers

Earlier this month SayEducate explored the growing trend where buyers are choosing foreclosed homes as one way to enter the housing market or to get a second home for investment purposes. In, Foreclosures: Wise Investment or Money Pit? we examined the pitfalls and positives related to this type of financial decision making, taking care to emphasize the risks involved.

Since we posted the article, we’ve uncovered a handful of auctions being held around the country to dispose of foreclosed property. This weekend, one auction house hopes to see 200 homes sell and is hosting back to back auctions in Dallas and Houston to give buyers an opportunity to buy discounted houses.

It isn’t our policy to endorse or give out details about specific home auctions, but our gut reaction to them is for you to perform due diligence before placing a bid. Specifically, by visiting the property in person and doing a thorough inspection, these steps will reveal whether the house is worth buying or not.

Of the few home auction websites we’ve visited, there seems to be plenty of information available to you including:

The licensure information — Real estate agents and brokers must be licensed and auctioneers must have a state license too. People associated with the selling of a home via auction should be willing to disclose their credentials. If not, then don’t place a bid.

Open houses — Every property being sold should be visited, therefore find out when open houses are held. Some homes are available by appointment only; if you cannot gain access, then don’t place a bid.

Financing — Some companies have a financing department available or affiliated lenders who will pre-approve your mortgage. Unless you’re paying cash for the property, you’ll be expected to put about 5% down and be able to come up with the rest of the money by closing, which is usually 30-45 days out. Please note that many auction companies will tack on a fee, usually 5%, on top of your final price as a buyer’s premium.

Of course, you’ll want to understand what other fees are your responsibility (e.g., title costs, attorney charges, liens, taxes, etc.)  before proceeding and what other paperwork you must handle. If you find a home you like and you have a bid you’re ready to offer, then attend the auction for your chance to buy a foreclosed home.

The present housing market has driven down prices while driving up foreclosures, making 2008 an excellent time to buy. Perform due diligence and you could come away with a bargain.

Tags: auction, foreclosure, home auction, home buy, home sell, home title, liens, mortgage, Property Taxes, taxes

I was having a discussion with a friend last week when our conversation turned to the housing market. Bleak news upon bleak news for some people, but not for my friend.

Instead, he has been eagerly scouring the area for foreclosed homes and is of the mind to buy one or two at deeply discounted prices, fix them up, and selling each at a substantial profit. Though the local housing market isn’t as strong as it was just a year ago, people are in the market for a nicely kept ranch or colonial that costs less than $250,000, a price that is common in our area of the country.

On the surface, such an idea seems interesting especially since my friend knows how to fix just about anything and has an eye that can assess what it will take to get a home market ready. What our conversation also revealed was some inexperience in locating foreclosed homes and the best process to snag one at a price that was sensible.

Though I am no expert in the buying and selling of foreclosed homes, I have found some resources and tips to streamline the process, information I have forwarded to my friend and am willing to share with you as well:

Search Online — Several websites provide information about real estate owned (REO) properties, bank-owned foreclosures available where you live. Redfin.com, RealtyTrac.com and Foreclosures.com each feature listings of homes banks would rather not own. As the saying goes, “banks are in the habit of managing money, not property.” Therefore, if you do your research right you could offer the bank substantially less than the home’s market value especially when calculating the cost for repairs.

Repairs, Maintenance — My friend has an excellent grasp of what costs are associated with making repairs and has a good eye to inspect and find problems. Not every person in the market for a foreclosed home has that talent, necessitating that a home inspector be retained to help find these problems for them. In addition, a contractor will probably be needed to help oversee this type of project.

Use a Broker — Unless you have the skills to bid for a foreclosed home at an auction, you would be better dealing with a broker when searching for a foreclosed home. Some banks will only deal with professionals in the first place, while a broker can give you access where none would be available otherwise.

I do not know whether my friend will go ahead and snap up a foreclosure or two, but I have no doubt that he is now better equipped to handle this type of transaction if and when the opportunity arises.

Tags: foreclosure, home buy, home maintenance, home repair, home sell, real estate agent, real estate broker, real estate owned, REO