Unfortunately there are many people facing foreclosure and are desperate. This makes them an easy target as they are looking for any help to save their home. How the scam works is that a mediator or mediation specialist matches a distressed homeowner with a management company that says they will save the day by using the company’s great credit to refinance. All the homeowner has to do is pay a fee and sign title over to the management company, which sounds like a great idea because it will save their home. The homeowner than becomes the tenant with their rent paying down the mortgage, allowing them to rent the property until they can buy it back from the management company.
As the homeowner’s late fees, attorney fees, and back-payments add up they are desperate to find a solution. What makes this appealing to the homeowner is this appears to give them a way to keep their home and protect their credit from being damaged.
The management company gets not only what was paid them as a fee, but they also steal the equity from the home and then disappears. So the homeowner loses their home, their equity, everything, and what’s worse is that they were expecting to rent their home but instead they get evicted and end up homeless.
How To Protect Yourself
- Research the mediation company by checking references and contacting the Better Business Bureau.
- Verify the existence and reputation of the management company, and ask for references.
- Never sign title over to anyone unless you contact an attorney to verify that everything is legit.
- If you are facing foreclosure, or are in pre-foreclosure, contact either the better business bureau or the largest local real estate investment club for people who specialize in being a foreclosure specialist.