Now there is nothing wrong with someone spending their money in exchange for a worthwhile service.  There are many reputable and capable companies, institutions or individuals that offer a valuable and legitimate service. QuadReal Investment Group, Inc. has a proven track record based on integrity, professionalism and results. But in many cases, the services offered to people in foreclosure are nothing more than worthless scams looking to exploit the owner’s hardship. Many times, instead of helping, these scams only serve to make the homeowner’s problem worse.

Foreclosure scams target people whose mortgages are in trouble. Scam operators advertise over the internet and in local publications. They distribute flyers, send out mailings and in some cases even make phone contact with the homeowner. There are many different approaches to these scams.

Before the homeowner is even aware of it, the scam artist has acquired the deed or title to their home. Or even worse, the scam artist has transferred the title of the property into a trust that then enables the scam artist to rent or “resell” the homeowner’s property while, to the homeowner’s surprise, they remain legally obligated to pay the mortgage!

Any of these pitches should send up big, bright red warning flags! Here’s why: Instead of contacting the lender or refinancing the homeowner’s loan, scam operators pocket the money that you pay to them.

Many companies and sometime even individuals, some reputable, most not, will offer to negotiate or consolidate the homeowner’s debt to help them out of their mortgage jam. The catch is, the homeowner will be asked to pre-pay for these services. The truth is that in many cases, the services do not offer anything that the homeowner could not do on their own. The homeowner should know that there are many non-profit debt counseling agencies that will provide the same services for free.

So who are these predators? You see the day-glo signs and billboards and classified ads everywhere these days.     WE BUY HOUSES!      WE BUY UGLY HOUSES!      CASH FOR YOUR HOME!   

For the most part, Americans have mentally filed these come-ons under good old-fashioned American entrepreneurship in action! But if you take a closer look at most foreclosure “rescuers” you will see those day-glo signs and large billboards for what they really are: Warning signs of the bubble burst to come.

Foreclosure “rescue” scams are nothing new. What is new however, is the historic convergence of economic and political forces that may soon bring about a home-equity version of the stock market crash of 1929. It can be blamed on loose credit, lending deregulation and a Fed-supported campaign encouraging Americans to tap into their home equity reserves.

Like sharks and blood, scam artists always smell the money. And in America, we have been pouring our money into our homes since the tech-stock collapse and the huge downturn in the market following 9-11. Those events gave us a renewed awareness of our risk tolerance. Homes (real estate) were safe and real. And, partly fueled by this renewed demand, real estate suddenly became the investment of choice for stock-weary working folks. Now that they may be facing foreclosure, this has made them vulnerable to scams and scam artists. These scam artists are the bottom-feeders. They are however, an unavoidable reality. They make it extremely difficult for reputable businesses, operating with integrity and true compassion, to distance themselves from these dregs.

On top of this, financial institutions capitalized on this sea of change by loosening credit. You can buy a home…maybe two. Can you really afford not to? And, just so you an continue living the lifestyle you’ve become accustomed to, they have offered an unprecedented number of ways to strip your equity through lines of credit, home equity loans and cash-out refinancing. The Feds cooperated by keeping interest rates at historic lows.

Real estate, our homes, suddenly started to look like, well…stocks – with one BIG catch. All you are doing when you take out a second mortgage on your home is borrowing more money.

Welcome to the “MIDDLE CLASS SQUEEZE”. Rising costs of health care, housing and education, property taxes and insurance, and gasoline, combined with increased job uncertainty, income volatility and eroding salary levels, have placed our piggy banks – our homes – at a financial risk like never before.

The over-inflated real estate bubble is not only unmistakable,  but when it bursts, its effects are going to be widespread. One only needs to revisit Economics 101: When supply exceeds demand – prices plummet to see clearly what is on the very near horizon.

The facts are, a quarter of all American homes are owned by investors. We are now seeing those investors fail or pull out of the market in a mass exodus. No market can sustain losing 25% of its participants. Listen for the thunder of the not-so-distant storm.

In a 2005 National Consumer Law Center Report, the NCLC interviewed numerous state attorney generals and legal aid staffers. The report, entitled ‘Dreams Foreclosed: The Rampant  Theft of Americans’ Homes through Equity-Stripping Foreclosure ‘Rescue’ Scams.” found that foreclosure “rescue” scams fall into three main categories:

“Rescuers” often place ownership into a Trust in the owner’s name in order to avoid the due on sale clause found in most mortgage contracts. They then transfer ownership through the trust to themselves or to a front operation. In these instances, the mortgage company is unaware that anything is amiss; the homeowner, however, is frequently left on the hook to pay the mortgage on a house he or she no longer owns.