Protect Yourself from Mortgage Assistance Scams

A recent uncovering of a mortgage assistance scheme involving a Detroit man and his “faith-based” company has borrowers asking, “How do we protect ourselves from foreclosure relief scams?” Freddie Mac offers tips to help borrowers become cautious of companies that seem too good to be true.

The Scam that Started it All

Staring from November 2009 and ending on July 2013, a faith-based mortgage assistance scam was carried out by a Detroit man named Anthony Carta. Carta’s company was called Freedom by Faith Ministries and it promised to aid distressed homeowners, keeping them out of foreclosure in exchange for a fee. Carta pocketed the money without helping a soul. Over 300 victims were involved in the scam and Carta was ordered to pay $400,000 in reimbursement and was sentenced to at least 30 years in prison.

Freddie Mac weighs in on the scam, pointing out that fraud doesn’t discriminate. “The idea behind ‘affinity fraud’ is to exploit the baseline trust that generally exists within an “affinity group” – i.e. a group defined by a common heritage, language, ethnicity, workplace, or circle of friends. What happened in Detroit is a sad reminder that no group is inherently safe from fraudsters, including devout and religious people,” Freddie Mac wrote.

Freddie Mac’s Precautions

Freddie Mac released a blog informing borrowers what to watch out for and ways to be proactive. The do’s and don’ts consisted of the following: Don’t sign documents that contain errors or blank spaces. If you don’t understand a document, don’t sign it either. Documents that transfer the title of the home are not to be trusted. Genuine mortgage workouts or home retention solutions won’t require the title of a home to be transferred.

Being Cautious/Proactive

Be cautious of any companies that claim to stop foreclosures for an upfront fee. In particular, be careful of a company that promises to pay your mortgage and rent your house back to you if you give them title to your home. Call your mortgage servicer to modify your mortgage or write up a plan to avoid foreclosure since they are the only ones who can do that.

Schemes exist but with proper knowledge you can remain safe. Utilize the above tips if you’re unsure about a mortgage assistance company.

 

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