Once you've researched the foreclosure process in your state, you'll be well-equipped to avoid fraud. Most cases of fraud become apparent when the scammer tries to rush or delay the foreclosure process -- be wary of people who say they need a payment immediately or claim that they have a secret method of stalling the foreclosure process. Most likely, that payment will do little, if anything, to resolve your foreclosure, and the stalling tactics, which can include bankruptcy or steps that drive you deeper into debt, could leave you facing worse consequences in the end [source: Freddie Mac].
Likewise, understanding the process allows you to keep an eye on the bank and make sure that it complies with the law during the foreclosure process. If the bank skips, rushes or seems to delay a step, you should ask questions -- or have an attorney ask questions -- to find out why the bank deviated from state-mandated steps and schedules. This could be a sign that the lender is perpetuating a fraud or is simply being lazy or negligent in the process. Either situation could jeopardize the lender's ability to foreclose on the house [source: Dayen].
Foreclosure is frightening. It can cause an immense amount of stress in your life and can ruin your credit for years after the fact. Fraud during this process is not only a possibility (you're stressed, tired and susceptible to scammers' tricks during this time), but also a threat that can turn the foreclosure process into a true nightmare. The best protection against this happening is to avoid foreclosure in the first place: Plan a home purchase carefully and make sure the mortgage will fit into your budget. Manage your finances with an eye toward meeting your loan obligations, and you'll have taken the best possible step to protecting yourself from foreclosure fraud.
For more information on foreclosure, check out the links below.
- Bryant, Charles W. "How Foreclosures Work." HowStuffWorks.com. Dec. 6, 2007. (March 2, 2011)https://money.howstuffworks.com/personal-finance/debt-management/foreclosure1.htm
- Dayen, David. "MA Supreme Court Deals Banks a Major Blow on Foreclosure Fraud, in the Ibanez Case." Firedoglake.com. Jan. 7, 2011. (March 2, 2011)http://news.firedoglake.com/2011/01/07/ma-supreme-court-deals-banks-a-major-blow-on-foreclosure-fraud-in-the-ibanez-case
- Freddie Mac. "Avoiding Mortgage Fraud." (March 4, 2011) http://www.freddiemac.com/avoidfraud/