Warning Against Foreclosure Scams in the Latino Community
The Minnesota Homeownership Center is working to raise awareness of foreclosure rescue scams in the Twin Cities’ Latino community throughout the month of August with a new paid media campaign. The core message is simple: homeowners in danger of foreclosure should be wary of scam artists who claim to offer help but charge up-front fees and often make the situation worse.
“During the housing boom subprime lenders were disproportionately preying on Latino families, among other demographics, and now these families are at a disproportionately great risk of foreclosure,” said Ed Nelson, Marketing and Communications Manager for the Minnesota Homeownership Center. “Now these same unscrupulous people are claiming to offer foreclosure prevention help. With this awareness campaign, we are working to ensure that Latino homeowners in danger of foreclosure are on the lookout for people who promise a solution but instead make a bad situation worse.”
In particular, the Minnesota Homeownership Center is encouraging homeowners to be on the look out for three common types of foreclosure rescue scams:
- Foreclosure Consultant. Individuals or companies target homeowners already in default and charge an up-front fee for advice, or to negotiate with a lender on behalf of the homeowner. Once the fee is received, these companies are often never heard from again.
- Mortgage Modification Scam. Companies using official-sounding names and logos target homeowners (often before they are in default) to offer assistance securing a mortgage modification in exchange for up-front fees.
- Forensic Loan Audit. A company or individual will sell “auditing” services on a mortgage with the hope of finding a state or federal law violated by the terms of the mortgage agreement. These auditors claim that such violations will deem a mortgage null, thus freeing the homeowner to walk away from the home without damage to credit. Again, these groups charge up-front fees.
There are many types of foreclosure rescue scams, but all share one common thread: they prey on homeowners in danger of foreclosure and charge hefty up-front fees, only to disappear and leave the homeowner in even worse shape.
The Minnesota Homeownership Center is encouraging all homeowners to learn the answers to three questions when considering outside help to prevent a foreclosure:
- Does the organization charge a fee at any point for their work?
- Does the organization benefit financially from the course of action that they are recommending?
- Has the organization registered with the Minnesota Department of Commerce as an approved loan modification organization?
The Look Before You Leap campaign will carry this message to Latino households in Minneapolis and St. Paul through direct mail (postcard mailing), bus shelter ads in select neighborhoods, and radio and print advertising in Hispanic media outlets.
Homeowners are also able to report scams and request help avoiding foreclosure through this website.
The Latino-specific outreach effort is part of a broader, ongoing effort to raise awareness of foreclosure rescue scams in communities across Minnesota. The most recent effort is made possible through a public awareness grant from the U.S. Department of Housing and Urban Development (HUD).
The Minnesota Homeownership Center is leading this public awareness effort as part of its role as the coordinator of Minnesota’s free Homeowners Advisors Network. In this role, the Center works with a network of more than 30 nonprofits across the state to offer free foreclosure and credit counseling to all Minnesotans in danger of foreclosure. The network also offers credit counseling and first time homebuyer education courses as part of its mission to promote and support successful and sustainable homeownership statewide.
For more information about counseling, or to connect with an Advisor in your community, visit our help page, here, or call (866) 462-6466. Free counseling help is available in both English and Spanish.