In 1999, the Federal Trade Commission (FTC) filed a much-publicized judgment against Tax Relief ASAP, a company that claimed it could help homeowners at risk of foreclosure modify their mortgages -- for an up-front fee that in some cases exceeded $5,000. In exchange for that payment, many of the cash-strapped homeowners received excuses for why their cases were "too far gone to fix," rather than actual assistance solving their mortgage issues.
About 1,455 homeowners fell for the scheme, and many of them lost their homes to foreclosure as they waited for Tax Relief ASAP to provide the services it advertised. The FTC recovered enough money in its settlement to pay back roughly 25 percent of the victims' losses but couldn't do anything to help the homeowners who had already gone into foreclosure [source: Waggoner].
This fraud case highlights a common practice of scam artists: After identifying a group of people in a desperate situation, they promise a solution in return for an up-front payment. These scammers often use their time and money to advertise their services rather than helping the clients who have already paid [source: Waggoner].
These scams can be hard to identify, thanks to sophisticated marketing and aggressive sales pitches designed to push victims into their financial trap. Check a company's reputation with your local Better Business Bureau, and be wary of any company that promises to help solve your foreclosure problems for an up-front fee.