My Definition of Foreclosure Scam: To me a Foreclosure Scam is when you are convincing the homeowner to do something that is in YOUR best interest NOT the homeowners. So, someone can call it a Scam or just plan ethically & morally wrong.
 Keep in Mind...that it is common for some of the parties involved with trying to convince the homeowner to take action toward their "Foreclosure Prevention Plan" may really not know what they are doing as they are not education or privileged to the "Foreclosure Prevention Plan" information that will be conducted by a Third Party.
Situations I am currently seeing while working in the
Local Lehigh Valley Real Estate Market 1) Homeowners being charged for Loan Modifications *WITHOUT knowing there is Local Help for free - Okay, yeah there are all kinds of business that popped up in the recent years to make money on conducting a Loan Modification for the Homeowner. The homeowner can do this on their own by contacting their Mortgage Company. But, it can be an overwhelming experience. So, you can seek help from our Local NON profit organization and/or get help on refinancing options from our PA State programs again, FREE help. *There are legitimate services for conducting a Loan Modification with a Homeowners Mortgage Company. The process is identical to processing a Pre-Foreclosure Sale/Short Sale. If the homeowner would like to pay a fee to not deal with the hassle of doing a Loan Modification on their own, FINE...My issue is with the Homeowner thinking that the ONLY way out is by paying Thousands to someone to provide the service and NOT knowing they can get help for FREE.
2) The Homeowner Paying an Up Front Fee for either a Real Estate Agent or an Investor to conduct a short sale also known as a Pre-Foreclosure Sale on their property. Again, The homeowner should Pay nothing! The homeowner does not have any money or they would be paying their mortgage, right?! Well, yeah...people will pay to Avoid a Foreclosure on their credit! BUT the homeowner can get these services AT NO CHARGE! Lehigh Valley Foreclosure vs Short Sale would convince anyone to pay a fee to save credit BUT why pay if you do not have to?
Situation #1: Real Estate Agent Charging a Fee: Not sure why a Real Estate Agent would charge you a Fee to conduct a short sale because your Mortgage Company will pay them the commission. I guess the Real Estate Agent does not feel they will be making enough money with the commission they will be paid by the Mortgage Company? Again, we do not charge you a fee.
Situation #2: Real Estate Agent working with a Third Party "Investment Company" The Investment Company charges the Fee - The Real Estate Agent does not work directly with the Bank because they do not want to be bothered with all the work that is involved with gathering all the necessary paperwork and/or the follow up and negotiations that are required to complete a successful Pre-Foreclosure/short sale on your property. So, they refer this work to a company who does this work for them sometimes individual in vestors and sometimes large companies and they need to get paid to do the work as the mortgage company typically will not pay a third party Investment company ONLY Real Estate Agents...so this is where the homeowner comes in. We do not mind doing all the work that is involved with Listing and negotiating for a successful short sale approval because we work in a TEAM - My partner Brian Segel handles all typical listing & marketing of the property and I handle all the communication, document gathering, followup and negotiations with your mortgage company.
Situation #3: Real Estate Agent is the Homeowners Listing Agent Only. There is no fee charged to the homeowner BUT there is an Investor involved in the transaction acting in the same capacity as the above #2 situation, the investor is the one who is getting all the paper work and documents from the homeowne r and communicating/negotiating with the bank. So, How does the investor get paid? You don't think they are going to do this out of the goodness of their heart do you? The investors job is to prove to the bank that the property is worth less then current market value maybe $10, 20, or $30,000.00 less and then work with the Real Estate Agent to get a Buyer and once the buyer is found who will pay really close to current market value, the Investment company purchases your home from the bank at the lower end and then closes quickly within a couple days...sometimes the same day. This is known as a double settlement. Many would challenge me that there is nothing wrong with this....But, come on the bank deserves to get as much money as they can from the sale of the property....as they are already accepting less than the Total Loan amount. UNLESS of course the investor is purchasing the home at current market value which includes a list of repairs that he intends on making and then the home is resold - The investor deserves every penny of this profit.
Hey, Don't take it from me....... check out Trusted Sites Like Wikipedia & The FBI ! FBI - 2008 Mortgage Fraud Report "Year in Review" Wikipedia Foreclosure Rescue Scam Page
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