Avoid foreclosure scams
Watch out for offers to help you save your house and avoid
Homeowners having difficulties making their mortgage
payments on time or facing foreclosure should beware of foreclosure
scams. If you are in either situation and fall victim to a scam, you
could lose both your home and the equity you have built and suffer long-term
damage to your credit.
Information about your property is public record and
is accessible by anyone. The following are also public record: information
recorded with the county when you bought your house, notifications of
late mortgage payments filed by the lender or a lien holder, and if
the house is subject to an auction or to be foreclosed. Offers to help
homeowners in trouble with their mortgage are allowed under Oregon law,
but the law does put restrictions and requirements on the services people
provide and how they are paid. Its important for homeowners to
understand their rights and responsibilities, and avoid potential scams.
Click here to view a presentation
about foreclosure scams and read below for frequently asked questions.
What should I do if I received notifications
from my lender about my late payments?
Do not ignore them. Contact your lender immediately,
even if you are only foreseeing negative changes in your income. Your lender
likely will be willing to negotiate a payment plan to help you avoid foreclosure
if you provide the lender with a statement about your financial hardship.
Request to talk to the loss-mitigation or authorized department to discuss
potential payment plans.
If you choose to negotiate with your lender yourself, make
sure you keep all records and contact information. All agreements should preferably
be done in writing.
If you do not feel comfortable negotiating with your lender,
contact a reputable nonprofit organization and ask for assistance. Make sure
you have all the information about your loan and financial situation
available when you meet with an approved counselor. Tools exist online such
as the one found at www.homesafepmi.com/bif/
that can help you consolidate your personal information.
A list of government-approved counseling agencies can be
found at www.dfcs.oregon.gov/ml/foreclosure/counselors.html
or by calling the Oregon SafeNet toll-free number at 800-SAFENET (800-723-3638).
You will be directed to the nearest nonprofits in your area. If you are not
able to schedule an appointment with a local nonprofit, visit the National
Foreclosure Hotline Web site or call 888-995-HOPE (888-995-4673).
If you choose to hire an attorney, verify that he or she
is an active member of the Oregon State Bar Association by checking their
Web site or by calling
Be careful when visiting Web sites or calling telephone numbers.
There are fictitious Web sites and toll-free numbers similar to those offered
by official and reputable institutions. Please read the Homeownership
Preservation Foundation (888-995-HOPE) press release.
What should I do
if I am contacted by an individual or a company offering to help me negotiate
with my lender or promising to save my house and help me avoid foreclosure?
These companies or individuals are typically called foreclosure
consultants or equity purchasers. Foreclosure consultants offer, for compensation,
services to stop or delay a foreclosure sale by negotiating a resolution with
the lender. The result would reduce damage to a homeowners credit. Equity
purchasers, under a contract, would legally obtain title to all or part of
a home in foreclosure.
Before hiring one of these companies, verify with the Corporation
Division of the Oregon Secretary of State whether they are authorized to do
business in Oregon. Their Web site
provides a search feature, or you can call 503-986-2200. You may also visit
them at the Public Service Building, Suite 151, 255 Capitol St. NE, Salem,
OR 97310. Make sure you have the correct name and spelling to compare it with
any laws in Oregon for homeowners protecting me against possible scams if
I am delinquent on my loan or my house is in foreclosure?
Yes. A new law, the Mortgage Rescue Fraud Protection Act,
passed in early 2008, protects homeowners and imposes some requirements for
foreclosure consultants and equity purchasers who offer to provide services
This new law requires foreclosure consultants to provide
a homeowner with a written contract with plain language disclosures and prohibits
them from receiving any interest in the home in foreclosure. The foreclosure
consulting contract must include a full description of services to be provided
and the total costs of the contract.
The law requires equity purchasers to provide the homeowner
with a written contract in plain language. If applicable,
it requires equity purchasers to ensure the homeowner has the ability to buy
back the home while its in the foreclosure process or if the process
has been stopped; it entitles the homeowner to a share of proceeds if the
home is re-sold quickly; and it requires the transfer to take place in escrow.
The homeowner has the right to cancel a foreclosure consulting
or an equity purchasing contract. Refer to the question below "What
if I decide I want to cancel my contract after I've signed it?" for
The law also does not permit consultants to impose upon homeowners
conditions, such as the waiver of their rights, or use an arbitrator to mediate
or decide about possible disputes. Any disputes must be conducted under the
jurisdiction of Oregon law.
This law amends the Unlawful Trade Practices Act and is under
the Department of Justices responsibility. Refer to the question, "How
can I file a complaint against a foreclosure consultant or an equity purchaser?"
for information on how to file a complaint against a foreclosure consultant
or an equity purchaser.
What should I ask for if I choose
to hire a foreclosure consultant to help me renegotiate my loan with my financial
You should ask for and receive a copy of the contract at
least 24 hours before you sign it. The contract should clearly include everything
the consultant will do for you and how much compensation the consultant will
receive. If another party is involved in the process who receives any type
of compensation from you, directly or indirectly, this should also be disclosed
What should I ask for if I chose
to sign a contract with an equity purchaser?
You have the same rights with an equity purchaser as with
a foreclosure consultant. An equity conveyance which is a legal addition
of an individual on the title of a property with the homeowners consent
- contract should completely and clearly describe the outcome of the contract
after it is signed and the result if the homeowner chooses to cancel the contract.
The contract should be given to you 24 hours before you sign it.
What if I decide
I want to cancel my contract after I've signed it?
To appropriately cancel your contract, the consultant should
provide you a physical address, an e-mail address, or a fax number. If you
cancel by mail, it becomes effective when it is properly posted. If you cancel
via fax or e-mail, the cancellation is effective upon receipt. You should
keep proof of delivery.
Foreclosure consultant: The contract should give
you the right to cancel at any time without penalties. However, you will be
responsible for any valid and verifiable expenses incurred by the consultant
while assisting you. You will have 60 days from the day you cancel the contract
to pay for these expenses, which may include interest of up to 9 percent.
Equity purchaser: You can cancel the contract three
business days after you sign it, excluding Saturdays or legal holidays.
What are some red flags I should
be aware of when contacted by a foreclosure consultant or an equity purchaser?
||Pressure to sign a contract before you have read it
||A guarantee to stop the foreclosure, regardless of situation
||An implication they are attorneys knowledgeable in stopping
||Collection of fees prior to providing services
||Requests for personal information or access to your
|| Instructions to stop making payments to your
lender or to send the payments directly to consultant/purchaser
||Prohibits contact with your lender or a nonprofit counselor
In this new web commercial from Freddie Mac, learn to spot
a foreclosure scam and find out how to avoid becoming victim to home foreclosure
fraud. (Follow this link for a Spanish version: www.youtube.com/watch?v=qQQJ6unRYaY)
I file a complaint against a foreclosure consultant or an equity purchaser?
Homeowners who believe they have been taken advantage of
are encouraged to file a complaint with the Oregon Attorney General office.
To file a complaint, you can either visit the
AGs Web site or call 503-378-4320 in the Salem area, 503-229-5576
in the Portland area, or toll-free at 1-877-877-9392. Complaints by mail can
be sent to Financial Fraud/Consumer Protection Section, 1162 Court St. NE,
Salem, OR 97301-4096.
For more information about your rights and obligations under
the Mortgage Rescue Fraud Protection Act, visit the Oregon
Legislatures Web site and search for House Bill 3630.
The Department of Consumer and Business Services, Division
of Finance and Corporate Securities provided the above information. The information
should be used as a reference only and it is not intended as a legal advice.
We recommend you to seek legal assistance for your particular circumstances.
Click here for
the Spanish version of this page.