The California Attorney General warned last week about a new scam aimed at struggling homeowners. It is called a "forensic loan audit." The scammer contacts the homeowner to offer an audit of the mortgage loan. The homeowner sends his mortgage documents, and the scammer purports to evaluate the loan for compliance with state and federal laws. The scammer sells this service by claiming that he will arm the homeowner with information about the loan that will provide leverage in loan modification negotiations with the banks. Instead, the homeowner pays upfront fees and receives nothing useful in return.
The scam has been advertised on TV, radio, and in print. It caught the attention of the California Attorney General's office, which partnered with the California Department of real Estate and the State Bar to warn consumers. The Attorney General's Office provides a number of don'ts to avoid foreclosure scams:
• Don't pay up-front fees. By law, foreclosure consultants are prohibited from collecting money in advance of providing services.
• Don't ignore letters from your lender or loan servicer.
• Don't transfer title or sell your house to a "foreclosure rescuer." This scam convinces homeowners they can stay in their home as renters and repurchase the home later. It also could be part of a fraudulent bankruptcy filing. A scammer can evict you and take your home.
• Don't make mortgage payments to anyone except your lender or loan servicer. Fraudulent consultants often keep the money for themselves.
• Never sign a document without reading it. Homeowners have unknowingly signed documents that transferred their home ownership to someone intent on evicting them.
