Straight Talk: Don’t fall for foreclosure rescue scams

By Better Business Bureau
Posted Aug 9, 2020 at 11:00 AM

Are you facing the threat of losing your home? Be wary of individuals and companies offering to “help” you out of your difficult financial situation. Consumer advocates report an increase in complaints about foreclosure “rescue” scams. These scams specifically target homeowners who are in financial distress. Scam operators may advertise over the Internet and in local publications, plaster posters on telephone poles and at bus stops, stick flyers in people’s front doors or contact people whose homes are listed in public foreclosure notices. Sometimes they direct their appeals to specific religious or ethnic groups.

 HOW THE SCAM WORKS
In one scenario, the scam operator offers to “buy” the homeowner’s property by paying off the amount that is overdue on the loan. The scammer convinces the homeowner to deed the property over to a third party. The homeowner is given the option of renting the property with the option to buy it back later. The rent payment on the home is often higher than the homeowner can afford. Frequently, the original homeowner cannot make the rent payment and is evicted from their home. Or, if the homeowner expresses a desire to buy back the property, the scam operator usually sets the price of the home higher than the homeowner can afford.


Hapless homeowners can lose their equity and their homes. Sometimes, the homeowner’s troubles go even deeper. In many cases, the initial mortgage has not been paid off and the deed was never transferred, as promised. Not only is the homeowner faced with eviction from the home, but the scam victim may still owe for the original loan amount.


In other versions of the scam, the homeowner receives a call, text, or email with the promise of lowering the mortgage payment and avoiding foreclosure. The scammer sometimes asks for payment for their services in the form of personal checks or gift cards. A recent victim in Ohio reported to BBB Scam Tracker that she sent $3000 in Walmart gift cards to a scammer asking for payment to help lower her interest rate.


The Better Business Bureau advises consumers who are tempted by such offers to recognize that they are at real risk of losing money, equity, their home or all three.
 

Tips to help if your mortgage is in arrears or you are facing foreclosure:
‒ Talk to your lender. Ask how to restructure your loan payment or how to refinance. Some foreclosure “rescuers” will offer to “negotiate” with your lender or lawyer. Know that such an offer is likely to involve a significant fee. If you are hesitant to talk to your lender yourself, engage the assistance of a trusted family member.
‒ Try selling the house on your own to pay off the lender. Signing over a deed in no way releases you from your mortgage responsibilities!
‒ Don’t allow anyone to complete paperwork for you, or ask you to sign a stack of documents, supposedly to secure a new mortgage. Victims have later learned that they signed a quit-claim deed to their home.
‒ Beware the personal approach. Some less-than-ethical businesses will stuff a handwritten note in your front door or mailbox that implies that “help” is available from someone you know or who has your best interests in mind. Foreclosure scam artists know exactly what neighborhoods to blanket with their offers.
‒ If a foreclosure “rescuer” instructs you not to contact your mortgage company or your attorney, beware. Your mortgage company is the very business that you should be in touch with! Furthermore, why would you agree to cease contact with your attorney when dealing with complicated financial matters that involve perhaps your biggest investment, your home?
‒ You should never sign a contract under pressure and never sign away ownership of your property when you don’t intend to sell it. Ask a trusted family member, your attorney or a financial professional to review any paperwork you may be asked to sign.
‒ Never pay with gift cards. A reputable company will not ask for payment via a gift card.
‒ Before signing any deals with a potential buyer, contact BBB to request a report on the company and check with your state Attorney General and local government department of consumer affairs.
‒ Seek foreclosure prevention information. Try calling the HOPE hotline, 888-995-HOPE, for free foreclosure prevention information, or visit their website at 995hope.org. According to the National Conference of State Legislatures website, the HOPE hotline is operated by the Homeownership Preservation Foundation, a nonprofit “dedicated to preserving homeownership and preventing foreclosure.”
 

FOR MORE INFORMATION Read more about housing scams in BBB’s Scam Alert on Home Title Fraud. This can be found at www.bbb.org/article/news-releases/22679-bbb-alert-home-title-fraud. If you encounter a scam, we ask that you report it to BBB.org/ScamTracker to help warn others.

The background: As I told you in May, the plaintiff firm Z Law filed a class action in 2019 on behalf of millions of Chegg customers whose personal information was allegedly compromised in a 2018 data breach. Chegg’s lawyers at Orrick Herrington & Sutcliffe moved to compel arbitration, citing a mandatory arbitration provision in the user agreement its customers are required to accept. In April 2020, U.S. District Judge Richard Bennett of Baltimore granted Chegg’s motion.
Z Law then filed more than 15,000 individual demands at the American Arbitration Association, asserting a claim of $25,000 for each Chegg customer. Z Law principal Cory Zajdel told me at the time that he sent six boxes of filings, containing individual demands by all of his 15,000 clients, to Chegg, hoping to foreclose arguments that his clients were not Chegg customers or did not exist.

In June, according to a July 1 letter from Zajdel to the AAA, the arbitration service instructed Chegg to pay about $7.5 million in fees to launch the arbitrations. (Chegg’s arbitration clause requires the company to pay the initial fees.)

I should say here that Chegg counsel Douglas Meal did not respond to my detailed email request for comment, so this account is based on Zajdel’s letter to the AAA.

Instead of paying the requisite fees and beginning the process of arbitrating with its customers, Chegg said those customers had breached their user agreements by asserting frivolous or improper demands for arbitration. Chegg unilaterally purported to terminate the agreements. The company then informed AAA that it was under no obligation to arbitrate with those customers, or, for that matter, to pay any fees associated with their arbitration demands.

FAQs on Stimulus Payments
By National Consumer Law Center
Updated April 15, 2020

Need legal help? Find a civil legal-aid office (income eligible) in your state or see the website of the National Association of Consumer Advocates to find an attorney in your state (search by subject area and licensed to practice). 

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) authorizes stimulus payments (also called “recovery rebates” or “Economic Impact Payments”) to certain individuals.  See § 2201 (pp. 55-60). Official information on these payments is at https://www.irs.gov/coronavirus  (click on “What you need to know about payments”), which is being regularly updated.   Other lists of FAQs are available at the New York Times.

The FAQs below are our best attempt to answer questions we are getting but please check the IRS website, which is updated regularly, for official information.  Notify us of any errors at consumerlaw[at]nclc.org. More information about responses to the economic crisis are on NCLC’s COVID-19 & Consumer Protections page.

THE QUESTIONS: (Answers at https://docs.google.com/document/d/1qDSnSg_AXvzOCyegmJoX6h3_ljN-In9S/preview)

1. When will the payments go out?
2. Who is eligible for payments?
3. How much am I entitled to?
4. I haven’t gotten a payment yet. How can I get my money quickly?  
5. I accidentally used the non-filer portal but I’ve discovered I need to file a tax return. What should I do?
6. I don’t have to file a tax return. How will I get my money? 
7. Can debt collectors, banks, or the federal government take my payment to cover back debts?  What can I do to prevent my payment from being garnished?
8. The account that I got my 2018 tax refund in is closed. What will happen to the money?
9. I receive Social Security, SSDI, SSI, or Railroad retirement and have dependents.  How can I get the extra $500 for my dependents?
10. I received my 2018 or 2019 tax refund through a tax preparer prepaid card or through a tax refund anticipation check (RAC) or tax refund anticipation loan (RAL). How will I get my stimulus payment?
11. I want to open a bank account for direct deposit but I have a negative history with an account screening agency. What can I do so that I don’t have to wait for a paper check?
12. I changed my address or bank account since my 2018 or 2019 tax return. How do I notify the IRS of the change?
13. I don’t have a bank account. Can I use a prepaid card, mobile debit card account ,or digital wallet? 
14. Will the IRS use the Direct Express card or another prepaid card? 
15. What do I do if I didn’t get my money?  
16. Will the payments affect asset limits used for eligibility for public assistance?
17. I am in bankruptcy. Are the payments considered income or can my creditors grab the payment?