Homeowners should be aware of this scam

This week I had conversations with three homeowners who are past due on their notes and working with the bank to modify. Two of these owners received a knock on the door from someone who "wanted to help".

First, be aware that anyone who knocks on your door without first sending a letter or calling you is suspect. When you receive news about your loan it is ALWAYS mailed to your address of record. The bank supplements these notices with phone calls. If you do not respond, at the least you will receive a written notice posted on your front door.

One owner was visited by a man who stated he represents the private lender on her 2nd trust deed. Though the owner is many months behind on the note, the lender has not made movements to foreclose. Simply, as the 2nd trust deed, this lender is second in line to receive any cash from the sale of property. If there is not enough, tough nuggies. That's why 2nd loans are considered more risky and carry a higher interest rate.

The owner invited the representative into the home, which was right up his alley. He got the chance to evaluate how much money he would gain or lose in the foreclosure based on the condition of the property and weighing it against neighborhood data. He claimed to want to help her modify her loan and at the end of the day - no surprise - recommended that she sell AND he had an agent that would help her. That is when the owner called me. I recommended that she speak with the holder of her FIRST trust deed - on which there is no default - regarding modification before she goes one step further.

In another case, I received a call for a referral to a "hard money" lender - one who will take risks when a borrower has less than stellar credit and at a higher interest rate. With the new Truth in Lending and Predatory Lending laws I'm not certain this would be possible for him, but when I listened further, I recommended that he get an attorney, not a new loan.

It seems that he was working on a modification for his $700K loan. He has written communication dating as recently as July 31 proving that he is not in foreclosure and that the bank is working with him. Yet, he received a knock on the door yesterday from a man claiming to be a real estate agent (he is, I checked, but the license number on his card is incorrect - and not just a misprint) representing the NEW OWNER of his home. He stated that my client's home was sold July 28th and the new owner would be happy to sell it to him for $300K. The agent said he was ready to write an offer and would need a $5K deposit. The client was calling me because he wanted to get a loan for $300K. I asked him first, "You want to buy a house you already own?" And he said "It's a good deal". What I couldn't get him to understand is that if he already owns it, he's paying twice. And #2, why would someone sell a $700K home (okay, maybe it's now worth $500K) for $300K? Are we to believe that the bank foreclosed and sold it for 1/3 of the note's value? It didn't make sense to me.

My client called the mortgage company and they indicated that the home was indeed foreclosed on July 28th. But that's three days before the last letter he received about his loan modification. And the client received no notice of intent to foreclose, notice of default or notice of trustee sale - either in the mail or taped to his door. This is a process that, in California, takes more than 120 days. The situation is highly suspect. Certainly, it is possible for a foreclosure to occur by mistake, I have seen that. But I have also seen these errors reversed.

I think this client is a victim of a scam, on some level. I referred him to a real estate attorney and advised that any further knocks on the door should go unanswered.

When times are hard, the bad guys shift into overdrive to find new ways to deprive you of your stuff. You must be vigilant in questioning anything that doesn't seem right and get help if you need it. This is your home we're talking about...serious business. Be careful out there!