Foreclosure, loan scams on the rise

Foreclosure and loan modification scams are on the rise, according to the National Short Sale Center, which is warning homeowners that while new federal legislation is encouraging short sales, the number of fraud cases associated with them is increasing.

A short sale is when the lender will accept less than the full amount due on a mortgage when a property is sold. Usually, the lender will accept the short sale to avoid the time and expense of a foreclosure.

The FBI is currently investigating more than 2,100 mortgage fraud cases, a 400 percent increase since 2004, says the center. The frauds include sale-leasebacks, quitclaims, stripping homeowner equity and misleading homeowners into signing over deeds.

Travis Hamel Olsen, president of the National Short Sale Center, said: "The fraud usually comes through in the fine print, but foreclosure rescue teams and highly suspect scammers are basically taking homes through a variety of means, resulting in foreclosure and eviction."

Homeowners should be alert to fake Web sites mimicking the layouts and fonts of government sites that offer to help people modify their mortgages. Victims of scams have been charged as much as $7,000, only to find the company they are dealing with "disappears." The government is prosecuting several mortgage scam companies, but new ones pop up every day.

The legitimate government site to check if you are eligible for refinancing or a mortgage modification is makinghomeaffordable.gov.

The message is clear: Never pay an up-front fee to complete a short sale. And, as Olsen put it: "Usually, if the deal seems too good to be true, then it probably is."

- Tracey Taylor