A foreclosure-related scam is a loose term for fraud, deceit, or trickery committed against homeowners facing foreclosure or others involved in the foreclosure process.  With the rise in foreclosures in the mid-2000s, foreclosure-related scams have exploded onto the real estate scene.  Some con artists offer to help homeowners in foreclosure, but in truth, merely intend to dupe the distressed homeowners out of their money or property.  Other scams target real estate agents, investors, buyers, lenders, tenants, or other people involved in the foreclosure process.

Red flags to look for in foreclosure-related scams
Homeowners in foreclosure and their real estate agents should be wary when dealing with someone who does any of the following:

• Asks for money upfront before providing any service;
• Asks for payment only in the form of cash, cashier’s check, or wire transfer;
• Asks for a transfer of title or an interest in the property;
• Gives an unqualified promise to stop foreclosure or other assurances;
• Offers to buy a home for a price above its market value;
• Asks for something to be done immediately without delay;
• Asks for the homeowner to give a power of attorney;
• Asks for signatures on a grant deed or deed of trust;
• Asks for signatures without giving homeowner a lot of time to review the documents;
• Asks for signatures on a document that has lines left blank;
• Fails to provide copies of documents signed;
• Refuses or fails to provide an oral promise in writing;
• Instructs a homeowner to make mortgage payments to someone other than the lender; or
• Instructs a homeowner not to discuss the situation with the lender, housing counselor, accountant, attorney, family, friends, or others.

How a foreclosure scam works
There are many different types of foreclosure-related scams, and new types of scams sprout up every day.  These foreclosure-related scams can be loosely categorized as follows:

Phantom help
In this type of scam, the scam artist offers to negotiate with the lender or perform other foreclosure-related services for the homeowner in exchange for a fee.  However, in reality, the scammer performs little or no service at all and eventually absconds with the money.  Whatever services the scam artist does provide, the homeowner could have probably done on his or her own.  The homeowner ends up not only losing the money, but often loses valuable time to make other arrangements to save his or her home from foreclosure.

Bail-out
This scam involves a con artist who offers some sort of plan or scheme to get the homeowner out of his or her predicament.  One common example is the rent-to-buy scheme where the scam artist promises to take title to the property, cure the default, and rent the property back to the homeowners until they get back on their feet again and buy back the property.  What in fact happens is that the scam artist reneges on these promises by, for example, not curing the default, not honoring the rent-back agreement, or selling the property to an unsuspecting buyer.

Bait-and-switch
This is another common type of scam where, for example, the scam artist tells the homeowner to sign one thing, but the homeowner ends up signing something else altogether, such as the grant deed to the property.

Other types of foreclosure scams
In addition to the above categories, there are many other types of foreclosure-related scams, including forgeries, theft, identity theft, property flipping scams, loan fraud, predatory lending practices, pyramid schemes, ponzi schemes, bankruptcy fraud, landlord-tenant fraud, short sale consulting fraud, and bank-owned property or REO fraud.  A scam can be a highly elaborate scheme or as crude and simple as a "We Buy Homes" or "Stop Foreclosure Now" sign on a telephone pole at the side of a road. 

How homeowners can protect themselves against foreclosure-related scams
The basic rule is "if it sounds too good to be true, it probably is."  Other measures to take to protect against scams include, but are not limited to, the following:

• Do not panic.  Do not make any rash decisions.  It’s precisely when our chips are down that we must keep a clear head.
• Before entering into any agreement or other arrangement with anyone, understand every aspect of what it entails.  Read documents carefully and thoroughly before signing.  If you cannot understand a document, seek the advice of an attorney or other professional as appropriate.  If you do not speak the same language as the person you’re negotiating with, don’t use that person’s interpreter or translator -- bring your own instead.
• Do not sign your name to any false statements or documents with spaces left blank, especially if you’re told that signing will be harmless or inconsequential.
• Get as much information as you possibly can before making a decision.  Ask questions.  Conduct as much research and investigation as you can upfront (see Question 10).  Do your best to understand the legal, financial, and tax consequences of your situation.  Look into different options.  Ask for advice and help from trusted family, friends, and professionals if appropriate.
• Always try to stay a step ahead of scam artists.  As society comes to know to watch out for one type of scam, con artists attempt to catch their victims off guard by devising new schemes.  For example, with greater public awareness that a "foreclosure consultant" representative must, among other things, be licensed and bonded, scam artists may start presenting themselves as something else, such as loan mediators, loan facilitators, legal officers, and so on.

Find legitimate help for foreclosure-related matters
The conventional wisdom is for homeowners facing foreclosure to contact their lender immediately.  Homeowners may also seek the advice of a reputable housing, financial or credit counselor, attorney, or other qualified professional.  The U.S. Department of Housing and Urban Development (HUD) has a Guide to Avoiding Foreclosure on its Web site at www.hud.gov/foreclosure/index.cfm.  Find a  list of HUD-approved housing counseling agencies in California here.  Also, the non-profit organization Homeownership Preservation Foundation has a 24/7 toll-free Homeowner’s HOPE Hotline at (888) 995-HOPE or visit its Web site at http://www.995hope.org.

Where to report a foreclosure-related scam
The following is a list of government enforcement agencies and other organizations for reporting fraud activities.  Some of these agencies and organizations are also excellent resources for obtaining more information about foreclosure-related fraud.

Office of the Attorney General
(916) 322-3360
(800) 952-5225 (in California only)
http://ag.ca.gov/consumers/mailform.htm (Consumer complaints)

California Department of Real Estate
(916) 227-0864
http://www.dre.ca.gov/cons_complaint.html (Consumer complaints)

Federal Bureau of Investigation (FBI) Headquarters
(202) 324-3000
Or contact your local FBI field office
https://tips.fbi.gov/ (FBI tips and public leads)

Department of Housing and Urban Development (HUD) Headquarters
HUD Office of Inspector General Hotline (GFI)
(800) 347-3735
http://www.hud.gov/offices/oig/hotline/

Federal Trade Commission
(877) 382-4357
http://www.ftc.gov/ftc/contact.shtm

Better Business Bureau - contact your local bureau
http://www.bbb.org/