It’s a sad reality but even when you’re facing foreclosure, someone wants to take advantage of you. As soon word hits the streets that foreclosure is imminent, you become a prime target for every real estate con artist within 50 miles of your home. To protect yourself and your family, you have be smarter than the bad guys.

Here’s some information about the scams and the scammers who perpetrate them:

1. Be wary of Quit-Claim Deeds: Signing a quit-claim deed (or any other type of deed for that matter) is the equivalent of waiving the white flag of surrender. Essentially, it says, “I hand over any rights of ownership I have in this home to so-and-so.” That so-and-so can then sell your property, use it as a collateral for a loan, or give the home to someone else, and then kick you out. Pretty scary, eh? That’s why I always warn to be extremely careful about any papers that you sign.
2. Avoid "Buy-Rent-Redeem" Scams: Here’s how it works: The scammer agrees to buy the home from you because you can’t afford to make the payments on the mortgage. She agrees to purchase it for what you owe on the property and then rent the house back to you. The scammer is supposed to go down and redeem the property, no problem. This sounds good to you. You’re currently paying 8 percent to 12 percent interest, so the “investor” can take out a 4.5 percent loan, pay off your high-interest mortgage, rent the home back to you for less than you’re currently paying per month, and still earn a profit. Everybody wins.

   The scammer may also offer to sell the property back to you after a certain amount of time under a lease-option agreement, or, maybe you just want to rent until your son or daughter graduates high school in two or three years. As long as you make your monthly rent payments, everything is supposed to be okay.

   Problems arise, however, when the scammer never redeems the house. What?! Why would the scammer pass up the golden opportunity to take out a loan at 4.5 percent and purchase this valuable piece of real estate? Because the scammer probably can’t qualify for a mortgage. They’re just out to collect some rent money from you.

3. Protect Your Tax Deed: A complete stranger shows up at your home with a tax deed claiming that he is now the proud owner of your home. You knew you hadn’t been able to pay your taxes for the past couple years, but could someone come along and buy your home just by paying the back taxes you owed? In some cases, perhaps, but never take anyone’s word for it.! Contact a qualified real estate attorney immediately if this happens to you. Don’t ever take anyone’s word for it. In most cases, you can redeem your property yourself but you have to act quickly.
4. Know Your Redemption Period: When an investor purchases your mortgage at a foreclosure auction and you live in a jurisdiction that has a redemption period, you suddenly become one of the biggest obstacles sitting in the way of that investor making money. Until you move out and the investor can get in with a crew to rehabilitate the property, they can’t fix and sell the property. Even worse, they may have the added expense of paying interest on any money she borrowed to make the purchase, along with property taxes and other costs.Know your rights. Know your local redemption-related laws.
5. Watch for Equity Stripping Scams: Some of the lowest of the lowlifes pose as good guys in white hats coming to save the day. They have a special program that has helped hundreds of homeowners just like you avoid foreclosure and bankruptcy, and they say they can help you, too! Some foreclosure rescue services are legitimate. Just make sure you check them out very carefully, work only with brick-and-mortar businesses that have real addresses and phone numbers, and verify everything they tell you through someone who knows the foreclosure laws in your area.

Check back later in the week for additional advice on protecting yourself from foreclosure-related scams and the people who are out to take advantage of you.

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