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Scamsters Cash In on Foreclosure Crisis

Phony rescuers collect big upfront fees from desperate homeowners

By Rob Quinn, Newser Staff

Posted Jan 15, 2009 3:44 AM CST

(Newser) – A new breed of crook is getting rich preying on homeowners desperate to fend off foreclosure, the New York Times reports. Scamsters set themselves up as "foreclosure rescue companies,” collect big upfront fees for the promise to modify loans, then do little or nothing to help. Some people have lost their only chance to save their homes, as phony rescuers use up critical time as well as money.

Authorities are seeking to stamp out the scams but they warn that foreclosure services are largely unregulated and it can be nearly impossible to tell the genuine companies from the crooks until it's too late. The Federal Trade Commission advises contacting nonprofit housing counselors and urges consumers to be wary of firms that guarantee results, charge upfront fees, or tell homeowners not to contact lenders themselves.

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A sign marks a foreclosed home in Sacramento, Calif. (AP Photo/Rich Pedroncelli, file)

The front door of a foreclosed home in Salt Lake City is marked with a message. (AP Photo/Douglas C. Pizac)

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When you’re desperate, that’s when the crooks come out.
- Ira Rheingold, consumer advocate

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Scamsters Cash In on Foreclosure Crisis