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Scams are fraudulent activities designed to make a quick profit. There are a lot of scams out there: banking, charity, home maintenance, investment, employment, internet, business, and a whole lot more. Now, you can add one more type of scam to watch out for – foreclosure rescue scams.

Foreclosure rescue scams are used by some companies to cheat money from homeowners who are facing a foreclosure threat. They operate by going through foreclosure listings to identify possible victims. They then send a letter promising the recipient a solution to avoid foreclosure. Unknowing victims, who are oftentimes stressed out and are on the verge of desperation, fall for the companies’ empty promises. They become willing to pay these guys money for negotiating a deal with their lenders, sincerely hoping that these people will save them from their problems. In time, homeowners find out that they have been conned.

The Federal Bureau of Investigation (FBI) sees the possibility of an increase in occurrences of these activities as the housing crisis continues to worsen. Several local governments are already implementing measures to crack down on these companies; an example is the “Operation Stealing Home” in Missouri, which led to filing of cases against people and businesses found to be taking advantage of homeowners.

Though such operations serve as a watchdog, we must be able to stand guard against such fraudulent entities ourselves. Here are some pointers you may use to avoid becoming a victim of rescue scams:

• •    When you are asked for a certain amount of money right away, cease to make any deals. This is an indication that you are dealing with a con.

• •    Be careful of signs and ads you see on TV, fences, and even telephones poles that tell you they can help you avoid foreclosure. They are more likely to turn out as scams.

• •    Consult first with family members, friends, or even professionals. Companies who forbid you from doing such are up to no good.

• •    Do not sign papers immediately, not until you have read it or discussed it with people you trust. Fraudulent people would ask homeowners to sign them right away, not giving you enough time to review it. There are cases where documents have hidden deed-transfer clauses, which you may unknowingly agree to by affixing your signature.

• •    Think carefully. Your common sense should tell you when an offer seems too perfect and flawless. When you feel that it is too good to be true, there’s a high probability that it is.

• •    Consult with legitimate organizations. Check out if there are programs by the U.S. Department of Housing and Urban Development (HUD) on foreclosure rescues. They have resources for homeowners facing foreclosure. An HUD counselor can provide you with stuff that you’ll need.

Do not let scammers take advantage of your situation. Foreclosure threat doesn’t have to make you a target, instead, it should make you more perceptive and alert against illegal activities such as foreclosure rescue scams.

If you are senior citizen without a job and who’s currently financially challenged, or if you know someone who is, then your homes may provide the solution for you.

Now, with the new housing bill signed into law by President Bush last week, homeowners aged 62 and above can take out money from home equities, tax-free.

Reverse mortgages allow senior citizens to tap their home equities and receive money in the form of monthly checks or a lump sum without tax charges. Money received from home equities can be used to pay for several bills in the house, mortgage, or even a weekend trip. Depending on factors that determine the amount of reverse mortgage you can get, you can receive as much as $625,500.

How does it work?

You have to meet certain criteria before you can avail of reverse mortgages. For starters, you have to be at least 62 years old. The amount you can get depends on the value of your home, amount of any remaining mortgage, your age, and present interest rates. Unlike a home equity loan, it doesn’t require you to prove your ability to repay before you can enjoy this.

The new law raised the maximum amount of money one can get to more than $625,000 and reduced origination fees to 2 percent on the initial $200,000 and 1 percent on the remaining balance, with a $6,000 cap. If you, for instance, take out a $400,000 reverse mortgage, your fee will be only $6,000 instead of $8,000.

Reverse mortgages provides a potential regular source of income for those who are too old to find a job but have to pay for their homes and other stuff. More importantly, it protects elderly homeowners against foreclosure as they maintain their right as the owner of the house. The amount they received also don’t have to be repaid for as long as they continue to live in the house and in the event of their death, their heirs don’t sell it.

The government has already taken measures to help alleviate the negative effects of the housing crunch. There are federal and state-specific housing assistance programs designed to help storm victims, elderly, veterans, and low-income families. But despite government help, it wouldn’t hurt if you take matters into your own hands, especially if you have no hope of really qualifying for those assistance programs.

What ingenious plan can you come up with to save your home? If you’re not earning enough to pay for your mortgage, then it is time to find another source of income. To do this, you need not scour every ad in the papers. Just look around and you may find the answer right inside your homes: Take in boarders!

By allowing another person live in your home, you are actually taking a step to save it from foreclosure. An extra room in your house is extra money if you find someone to stay in it for a fee.

Home sharing has become one of the ways Americans deal with the foreclosure crisis. By home sharing, you are actually earning money to pay for mortgage or any other expenses.

This is what Barbara Terry did to save her home.

When she fell behind her mortgage payments, she rented part of the single-family house she shares with her daughter for six years. Her tenant pays her $500 a month.

The fact that she is earning extra money lessens her worries for foreclosure risk. Not only that, she is also able to help other people, in this case, her tenant Katherine Ongiri who used to live in an unsafe neighborhood.

Terry found Ongiri through the help of a Baltimore local housing organization called St. Ambrose Housing Aid Center. The organization helps people find homes to live in through its homesharing program. It screens potential tenants as well as homeowners. Background checks are conducted to screen people with criminal records, drug or alcohol abuse, or those who are not deemed stable to become renters. The housing center also utilizes a 10-point questionnaire to identify a candidate’s pet peeves and other areas for compatibility.

Another organization, HomeShare Vermont offers services where non-related people can share a home. Here, both parties have their own private space and some common living areas. They make sure that no two home sharing arrangements are alike.

Established in the 1980’s, HomeShare was originally meant for elders or disabled people offering room space in exchange for help around the house. At present, the organization also matches old people and those with disability with a non-medical caregiver that does not live in. Caregivers are given a weekly salary, room and board.

“We’re seeing greater numbers of marginal people,” said Kirby Dunn, executive director of HomeShare Vermont. Dunn also said that volume at the agency went up this year, showing an increase of up to three to four times of both people seeking rooms and people looking for boarders.

Human Investment Project or HIP Housing in San Mateo County in California also helps people in the community live independently and sufficiently in decent, safe, and low-cost homes. Among the services they offer are Home Sharing, Home Equity Conversion for seniors, Property Development, and Self-Sufficiency.The organization calls both tenants and owners every three months to check if there are any problems between the two parties.

Terry, who used to help homeless people move into new housing units, is continuing her life’s passion while earning money at the same time. She is not only helping her tenant have an affordable roof over her head, but is also ensuring a stable home for her and her daughter for the years to come.

Something pleasant is waiting in the mail for many American families this week! For a change, aside from the usual dreaded utility bills and other payables, many will receive welcome news from the Federal Housing Administration (FHA) of the U.S. Department of Housing and Urban Development (HUD). The FHA has started resending direct mailers that offer a lifeline to families whose homes are in danger of foreclosure.

Direct mailers were first sent out in February to 280,000 recipients. During this second phase of the campaign, FHA has already distributed letters to 675,000 households. These letters present the average American family an opportunity to save their homes from foreclosure via low-cost mortgage alternatives.

Mortgage problems are common to homeowners. The negative effect brought about by “sub prime loans”, which come at higher rates, raised concerns as foreclosure rates increased during the recent months, prompting the FHA to think of ways to help homeowners deal with the mounting costs of keeping their homes.

And the housing crisis may just get worse with lenders losing much money and homes facing foreclosure. In fact, according to a recent study by First American Corp. of Sta. Ana, the United States will experience about 1.1 million foreclosures in the next six to seven years on adjustable-rate mortgages.

Families who are currently going through mortgage problems, as well as those who have already experienced them, are the recipients of the letters from FHA. These encourage families to consider switching to more affordable mortgage alternatives offered by the FHA.

FHA loans are guaranteed by the government and make lower and more affordable mortgage interest rates possible. Mortgages backed by the FHA are 30-year, fixed rate products so borrowers would not find it too difficult to keep up with payments. FHA also offers its FHASecure program that helps delinquent loan payers refinance with the FHA, which saves the payer an average of $400 savings per month.

HUD Secretary Steve Preston emphasizes how these may just very well be the most important letters distressed families will ever receive.

“This information could not only help save their current home, it could help provide them with long term financial security. This outreach campaign will ensure families are aware of the safe mortgage alternative offered by FHA,” he states.

The FHA has continually looked for ways to ease up the problems brought by the mortgage crisis. During the recent months, it has coordinated with various loan service providers to come up with solutions for this serious concern. It has opened a hotline that people can contact if they are experiencing troubles due to mortgage reset or any housing-related problems: 1 (800) CALL FHA.

People can also visit their official website at www.fha.gov to learn more about any housing assistance they could get, and to find answers regarding foreclosure prevention, legal rights, credit counseling, etc.

According to the news, the FBI has arrested 1,406 people accused of victimizing homeowners and borrowers and pocketing $1 billion in mortgage fraud schemes. Hundreds of real estate brokers have already been charged of the crime and more are being arrested in FBI and the Justice Department’s crackdown on cases of mortgage fraud.

How do we keep ourselves from becoming victims or unintentionally committing mortgage fraud? First, we must be aware of what mortgage fraud is. Basically, it is misrepresenting yourself in your loan application. If you misstated or deliberately gave false details on your application, you are liable for fraud.

Here are some helpful tips to avoid becoming a victim of mortgage fraud:

1. Be Alert. Most of the time, fraudulent mortgage deals are those that sound too good to be true. Never fall for “no down payment”, “cash back at closing” or “no income verification” deals. It would seem logical that snagging a deal this easy is not plausible.
2. Ask for friends’ referrals. If you know someone who knows a very reliable and good broker or lender, ask them. This gives less chances of you being duped by a con.
3. Research on the property. If the price being offered to you seems too high, check and see similar houses in the area and ask for its value. They should at least have price differences that are not too distant from each other. Check the sales history of the property. More importantly, make sure that the seller really owns the estate.
4. Be detail-oriented. If there is anything in the contract or any written document that you do not understand, ask questions. If possible, have an attorney who could help you with regard to the legal stuff.
5. Seek the experts’ help. Look for at least two people who are very well-versed in the industry. If possible, have friends or relatives refer you to one. These people know the ins and outs of the real estate world. If there is something that you need to know, these are the right people to help you.
6. Be careful with your signature. Before you sign anything, make sure that you have fully read and understood all the documents’ contents. Also, do not leave any information out; fill up all the blanks. You wouldn’t want someone writing something else there after you have signed.
7. Ask for copies of all important documents. That way, you will have everything in black and white.

With many fraudulent brokers out there, it is very important that we go to great lengths to shield ourselves from these people. Not only do they rob us of our money but also of our hopes and dreams that are the very foundations of our homes.

Related Post: Mortgage Fraud: How to Avoid Getting Duped on HousingAssistanceNetwork.com