Foreclosure Rescue Scams: The Three Signs That Should End the Call

Foreclosure filings are public records. That means the moment your case is filed, a list of people in trouble becomes available to anybody who wants it, and some of the people who want it are not helping. The approaches arrive by post, by phone and at the door, and several of them are convincing.

This article covers how these operations work, the signals that should end a conversation immediately, the specific structures that cause the most harm, and who to call instead.

Why they know about you

Nothing mysterious. A foreclosure petition is filed in the district court and it is a public record. Sale notices are published. Tax delinquencies appear in county records.

Companies compile those lists and market to them. That is legal and a great many of the resulting approaches are from legitimate businesses, including ours.

The problem is not that somebody contacted you. It is that you cannot tell from the letter which kind of person sent it, and the ones causing harm look the most professional.

The three signs that should end the call

If you remember nothing else, remember these.

Each of those has a reason.

Up front fees. HUD approved housing counselling is free. Legal Aid is free for those who qualify. Attorneys are regulated professionals you can verify. Somebody charging you to negotiate with your lender is selling what is available at no cost, covered in our article on free foreclosure help.

The deed. This is the one that takes houses. Once you have signed a deed you may no longer own the property, whatever you were told the arrangement was. Every legitimate purchase closes through a title company with a settlement statement and funds disbursed. A deed signed at a kitchen table is not a sale, it is a transfer.

Cutting off the servicer. This is designed to keep you uninformed while time passes. Everything in a foreclosure runs on notices and deadlines, and somebody who wants you not reading your post has a reason.

The structures that cause the most harm

Sale and leaseback with a repurchase option

The pitch: sell us the house, stay in it as a tenant, buy it back in two years when you are back on your feet.

What frequently happens: the repurchase price is set at a level that was never realistic, or the terms include conditions that are easy to breach, or a single late rent payment ends the option. The former owner becomes a tenant and then is evicted from a house they used to own.

These arrangements have caused real harm. Some are structured honestly and the structure itself concentrates risk on the person with the least power. If somebody proposes one, take it to an attorney before signing anything, and take the actual document rather than a description of it.

Collecting your mortgage payments

The pitch: pay us instead and we will negotiate with your lender.

What happens: the payments do not reach the lender, the foreclosure proceeds, and the money is gone. Your servicer is the only party who can credit your loan.

Official looking correspondence

Envelopes designed to appear to come from a government agency, a court, or your own lender. Logos, reference numbers, urgent language and a deadline.

Read the sender carefully. Where anything claims to be from your servicer, call the servicer on the number from your statement rather than the number in the letter.

Audits and reviews sold as a solution

The pitch: pay for a review of your loan documents that will reveal errors forcing your lender to modify or cancel the loan.

Treat any guarantee of that outcome with scepticism. Where there are genuine legal defences, an attorney identifies them and raises them in court, and Legal Aid does that free for people who qualify.

Anybody guaranteeing a result

Nobody can guarantee your lender will modify, that a foreclosure will be stopped, or that you will keep the house. A servicer makes those decisions and no third party controls them.

A guarantee is not confidence. It is a sales technique aimed at somebody frightened.

The softer signals

Less definitive than the three above, and worth noticing, particularly in combination.

• Pressure to sign today, or an offer that expires in hours
• Discouraging you from consulting an attorney or a housing counsellor
• Reluctance to put anything in writing
• No verifiable local presence, no address, no history you can find
• Blank spaces in a document you are asked to sign
• Instructions not to tell family, or to keep the arrangement private
• A request for the deed before funds move, in any form
• Refusal to close at a title company of your choosing

One of these might be nothing. Three together is a picture, and the picture is what matters.

The checks that take ten minutes

1. Ask a local title company about them. Title companies see every operator in a market and know who closes what they contract. It is the single most reliable check available and almost nobody uses it
2. Ask for proof of funds, and verify it by calling the bank on a number you looked up, covered in our article on proof of funds
3. Check the county records for properties they have actually bought, covered in our county records guide
4. Describe the offer to a HUD counsellor or Legal Aid. They recognise these structures immediately, and it costs nothing
5. Take any document away and read it somewhere else, without anybody present
6. Get a second and third offer. Anybody discouraging that has told you something

If you have already signed something

Do not assume it is too late and do not sit with it out of embarrassment.

• Get copies of everything you signed, and if you were not given copies, that is itself significant
• Speak to an attorney immediately. There may be arguments available depending on what was signed, what was represented and how it was executed
• Contact Legal Aid Services of Oklahoma if you qualify financially
• Check the county record to see whether a deed has been recorded against your property
• Report it, to the Oklahoma Attorney General's consumer protection function and to the Consumer Financial Protection Bureau. Reports create the record that stops these operations continuing

People stay silent because they feel foolish. These operations are professionally designed to work on people under stress, and being taken in is not a character failing.

Who to actually call

What a legitimate buyer looks like

Our interest, and the practical answer.

A legitimate cash buyer closes through a title company, provides a written offer with an expiry date, deposits earnest money with the closing agent, produces proof of funds when asked, lets you choose the title company, gives you time to read the contract, and never asks for a deed before funds move.

They also tell you when selling is not your best option. If reinstatement or a modification is achievable, that is a better outcome than selling and a buyer who says so is behaving properly. We say it throughout this site and in our guide on checking any cash buyer.

Hold us to all of it. Ask us for proof of funds, ask the title company about us, get other offers, take the contract away and read it. We would rather lose a sale to somebody who checked than benefit from a market where nobody does.

The short version