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Avoid foreclosure scams

Watch out for offers to help you save your house and avoid foreclosure!

Homeowners having difficulties making their mortgage payments on time or facing foreclosure should beware of foreclosure scams. If you are in either situation and fall victim to a scam, you could lose both your home and the equity you have built and suffer long-term damage to your credit.

Information about your property is public record and is accessible by anyone. The following are also public record: information recorded with the county when you bought your house, notifications of late mortgage payments filed by the lender or a lien holder, and if the house is subject to an auction or to be foreclosed. Offers to help homeowners in trouble with their mortgage are allowed under Oregon law, but the law does put restrictions and requirements on the services people provide and how they are paid. It’s important for homeowners to understand their rights and responsibilities, and avoid potential scams. Click here to view a presentation about foreclosure scams and read below for frequently asked questions.

       

What should I do if I received notifications from my lender about my late payments?

Do not ignore them. Contact your lender immediately, even if you are only foreseeing negative changes in your income. Your lender likely will be willing to negotiate a payment plan to help you avoid foreclosure if you provide the lender with a statement about your financial hardship. Request to talk to the loss-mitigation or authorized department to discuss potential payment plans.

If you choose to negotiate with your lender yourself, make sure you keep all records and contact information. All agreements should preferably be done in writing.

If you do not feel comfortable negotiating with your lender, contact a reputable nonprofit organization and ask for assistance. Make sure you have all the information about your loan and financial situation available when you meet with an approved counselor. Tools exist online such as the one found at www.homesafepmi.com/bif/ that can help you consolidate your personal information.

A list of government-approved counseling agencies can be found at www.dfcs.oregon.gov/ml/foreclosure/counselors.html or by calling the Oregon SafeNet toll-free number at 800-SAFENET (800-723-3638). You will be directed to the nearest nonprofits in your area. If you are not able to schedule an appointment with a local nonprofit, visit the National Foreclosure Hotline Web site or call 888-995-HOPE (888-995-4673).

If you choose to hire an attorney, verify that he or she is an active member of the Oregon State Bar Association by checking their Web site or by calling 800-452-7636

Be careful when visiting Web sites or calling telephone numbers. There are fictitious Web sites and toll-free numbers similar to those offered by official and reputable institutions. Please read the Homeownership Preservation Foundation (888-995-HOPE) press release.

What should I do if I am contacted by an individual or a company offering to help me negotiate with my lender or promising to save my house and help me avoid foreclosure?

These companies or individuals are typically called foreclosure consultants or equity purchasers. Foreclosure consultants offer, for compensation, services to stop or delay a foreclosure sale by negotiating a resolution with the lender. The result would reduce damage to a homeowner’s credit. Equity purchasers, under a contract, would legally obtain title to all or part of a home in foreclosure.

Before hiring one of these companies, verify with the Corporation Division of the Oregon Secretary of State whether they are authorized to do business in Oregon. Their Web site provides a search feature, or you can call 503-986-2200. You may also visit them at the Public Service Building, Suite 151, 255 Capitol St. NE, Salem, OR 97310. Make sure you have the correct name and spelling to compare it with official records.

Are there any laws in Oregon for homeowners protecting me against possible scams if I am delinquent on my loan or my house is in foreclosure?

Yes. A new law, the Mortgage Rescue Fraud Protection Act, passed in early 2008, protects homeowners and imposes some requirements for foreclosure consultants and equity purchasers who offer to provide services to homeowners.

This new law requires foreclosure consultants to provide a homeowner with a written contract with plain language disclosures and prohibits them from receiving any interest in the home in foreclosure. The foreclosure consulting contract must include a full description of services to be provided and the total costs of the contract.

The law requires equity purchasers to provide the homeowner with a written contract in plain language. If applicable, it requires equity purchasers to ensure the homeowner has the ability to buy back the home while it’s in the foreclosure process or if the process has been stopped; it entitles the homeowner to a share of proceeds if the home is re-sold quickly; and it requires the transfer to take place in escrow.

The homeowner has the right to cancel a foreclosure consulting or an equity purchasing contract. Refer to the question below "What if I decide I want to cancel my contract after I've signed it?" for more information.

The law also does not permit consultants to impose upon homeowners conditions, such as the waiver of their rights, or use an arbitrator to mediate or decide about possible disputes. Any disputes must be conducted under the jurisdiction of Oregon law.

This law amends the Unlawful Trade Practices Act and is under the Department of Justice’s responsibility. Refer to the question, "How can I file a complaint against a foreclosure consultant or an equity purchaser?" for information on how to file a complaint against a foreclosure consultant or an equity purchaser.

What should I ask for if I choose to hire a foreclosure consultant to help me renegotiate my loan with my financial institution?

You should ask for and receive a copy of the contract at least 24 hours before you sign it. The contract should clearly include everything the consultant will do for you and how much compensation the consultant will receive. If another party is involved in the process who receives any type of compensation from you, directly or indirectly, this should also be disclosed to you.

What should I ask for if I chose to sign a contract with an equity purchaser?

You have the same rights with an equity purchaser as with a foreclosure consultant. An equity conveyance – which is a legal addition of an individual on the title of a property with the homeowner’s consent - contract should completely and clearly describe the outcome of the contract after it is signed and the result if the homeowner chooses to cancel the contract. The contract should be given to you 24 hours before you sign it.

What if I decide I want to cancel my contract after I've signed it?

To appropriately cancel your contract, the consultant should provide you a physical address, an e-mail address, or a fax number. If you cancel by mail, it becomes effective when it is properly posted. If you cancel via fax or e-mail, the cancellation is effective upon receipt. You should keep proof of delivery.

Foreclosure consultant: The contract should give you the right to cancel at any time without penalties. However, you will be responsible for any valid and verifiable expenses incurred by the consultant while assisting you. You will have 60 days from the day you cancel the contract to pay for these expenses, which may include interest of up to 9 percent.

Equity purchaser: You can cancel the contract three business days after you sign it, excluding Saturdays or legal holidays.

What are some red flags I should be aware of when contacted by a foreclosure consultant or an equity purchaser?

· Pressure to sign a contract before you have read it
· A guarantee to stop the foreclosure, regardless of situation
· An implication they are attorneys knowledgeable in stopping foreclosures
· Collection of fees prior to providing services
· Requests for personal information or access to your bank accounts
· Instructions to stop making payments to your lender or to send the payments directly to consultant/purchaser
· Prohibits contact with your lender or a nonprofit counselor

In this new web commercial from Freddie Mac, learn to spot a foreclosure scam and find out how to avoid becoming victim to home foreclosure fraud. (Follow this link for a Spanish version: www.youtube.com/watch?v=qQQJ6unRYaY)

 

How can I file a complaint against a foreclosure consultant or an equity purchaser?

Homeowners who believe they have been taken advantage of are encouraged to file a complaint with the Oregon Attorney General office. To file a complaint, you can either visit the AG’s Web site or call 503-378-4320 in the Salem area, 503-229-5576 in the Portland area, or toll-free at 1-877-877-9392. Complaints by mail can be sent to Financial Fraud/Consumer Protection Section, 1162 Court St. NE, Salem, OR 97301-4096.

For more information about your rights and obligations under the Mortgage Rescue Fraud Protection Act, visit the Oregon Legislature’s Web site and search for House Bill 3630.

The Department of Consumer and Business Services, Division of Finance and Corporate Securities provided the above information. The information should be used as a reference only and it is not intended as a legal advice. We recommend you to seek legal assistance for your particular circumstances.

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Click here for the Spanish version of this page.