Report: Foreclosure Scams on the Rise

Soaring prices have put the homes of many financially distressed owners—and especially those with high-cost, subprime mortgages—in jeopardy, as a job loss, illness, or other unexpected event can push them into foreclosure.

These borrowers often turn to foreclosure rescue specialists, who offer to pay off the outstanding mortgage debt if the homeowner is willing to sign over the title, pay rent, and then repurchase the home sometime in the future.

A new report by the National Consumer Law Center reveals that these unscrupulous professionals have taken homes from thousands of unsuspecting homeowners who do not have the money to buy their property back—a problem that could swell to crisis proportions if rising interest rates push many more homeowners to the brink of foreclosure.

The center reports that such scams are prevalent in metropolitan Washington, D.C., Florida, and New York; and it urges struggling homeowners to either sell before the lender forecloses, attempt to refinance, or work with their lender to adjust their payment schedule.