"Stop Foreclosure, Save Your Credit" Scam

The economy is bad and is getting worse. What we’ll see is more and more foreclosures. Investors target people in foreclosure as people that are in financial chaos and need any type of assistance they can get. What you’ll need to look out for are the people attempting what are called “short sales”. Simply put, this is where an investor comes in as a third party and tries to negotiate with your bank to take less money on the sale of the house than is owed. There are many “nuts and bolts” to doing this, none of which are groundbreaking or revelutionary. They are simply negotiating techniques. I won’t go in to the details of short sales here. Typically for a short sale to be considered, the house must be at least 90 days past due, although I have seen it started as early as 60 days past due. Now here’s the clincher… the investor will lure you in by stating “don’t let foreclosure ruin your credit…. we can save you!!!” Well, I am sorry to say, once you have a 30 days past due on your credit report, its a heavy blow to your score and your future borrowing ability. 60 days late and your going to be hard-pressed to put your credit to any good use for another 5 – ish years, 90 days past due and you’re as bad as a foreclosure. Basically, don’t let investors tell you otherwise. It’s simply not true. What they CAN help you with is what is called a waiver of deficiency judgement. This is a form that is signed stating the bank will not pursue you personally for the difference of what you owe vs. what they are able to re-sell the house for. Don’t fear on this one too much however, as judgements drop off your credit report between 7-10 years anyhow. If you see the investor as offering you real, viable offers like the waiver of deficiency, then you may have something..here’s an investor willing to actually work for his money! With banks scrambling nowadays to gain any extra capital they can, deficiency waivers are few and far between.

Here’s A Summary of how to deal with the “Stop Foreclosure” clowns:

• They cannot and will not be helping your credit
• Again, have an attorney.
• Do not in any way enter into a contract that will let them tie your house up for ANY amount of time. First come first served for the sale of this house…time is money.
• There is no such thing as a “short sale” expert. Banks change what they wish to do, and many banks have short sale departments you can talk to yourself.
• Be careful the investor does not bring in a fake buyer that cannot perform on closing the house per the banks expectations. You’ll have wasted an awful amount of time.
• You do not have to be licensed for this.