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A renewed warning about foreclosure scams

Sunday - 3/6/2011, 8:43am  ET

Hank Silverberg,

WASHINGTON - The sour economy has increased the number of scammers out there preying on people in desperate need. Among those popping up with more frequency, companies which promise to fix your mortgage troubles.

Brian Gottstein, a spokesman for Virginia's Attorney General, says many of the companies are using approaches that should be suspect. For example, the company asks for a fee upfront to fix your foreclosure, guaranteeing they can fix it.

"Nobody can guarantee to stop your foreclosure if it's already proceeding", he says.

Gottstein says in Virginia, asking for an upfront fee is also illegal.

Other things to watch out for:

  • High pressure tactics, an offer to lease your home you can buy it back over time
  • An offer to pay cash for your house at a price far below the selling price of similar homes.

Gottstein says if you are in trouble with your mortgage, your first contact should be the lender , to discuss working out a plan for help. Find more information here.

The warning is being issued at the start of National Consumer Protection Week.

Other scams that have been circulating on a regular bases include fake debt collection calls, including phone calls or threats to try and get you to pay up quickly. Some pose as national banks or government agencies and may even threaten to repossess your house or garnish your wages.

The Attorney General's office says no legitimate debt collector would make such threats.

Your best defense there is to ask the caller for identification and never give out information over the phone. You should also keep a close watch on your credit reports to make sure there are no inaccuracies. You're entitled to one free credit a report a year from each agency. You can get one here.

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