Beware of Foreclosure Recovery Scams!

The old saying, "ignorance is bliss" doesn't apply to the foreclosure crisis. In fact, the scam artists are hoping that the complexity of mortgage deals and the sudden upward adjustments in the Adjustable Rate Mortgages (ARMs) will cause the confusion they need to con homeowners into selling cheaply.

Many homeowners didn't fully understand the implications of ARMs when the market moved against them. All they wanted was the cheapest mortgage payment possible and didn't consider how they would make the payments if the rate increased.

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Many homeowners on the verge of foreclosure didn't read the fine print of the ARM deal that they signed to buy their homes. At this crisis point, they better read more carefully this time or lose it all.

That's why it's critical for homeowners to compare the deals offered by foreclosure specialists. Get information on their businesses and run fast from any that seem to be fly-by-night operations.

Homeowners need to learn the terminology of the foreclosure process so that when discussing the options of refinancing versus selling at auction, they understand how they will be effected by these options.

Better stick with a different old saying - "knowledge is power." When deciding whether to file bankruptcy or work with a pre-foreclosure specialist, the homeowner needs to know the short term and long term impact of the choice.

It's not just about solving a financial problem now, but also about protecting credit and protecting their financial status for the future. The foreclosure crisis requires a smart response as much as a fast response.

Some homeowners now face foreclosure and are panicked about the pending process. The real estate buying frenzy came to a sudden crash and home prices fell right along with it. At the same time, those falling property values nibbled away at the homeowner's equity.

Once that happened, many homeowners had no chance of refinancing to save their homes and stop the rising payments as the Adjustable Rate Mortgages (ARMs) kept ticking upward.

The Foreclosure Workbook

Some of these homeowners chose the ARMs because they didn't have the financial strength to qualify for the traditional fixed rate mortgages at purchase and they were no better off after the ARM-twisting.

Desperate homeowners are looking for a way out of this financial crisis. The bank is looming over them, waiting to foreclose on the property. The options are dwindling almost daily.

Foreclosure filings were up 97% in December from the same time the previous year, which didn't make for a happy holiday. With foreclosure scam artists hanging around ready to pick up deals at the expense of young homeowners, it's hard to know where to turn for help.

There are foreclosure specialists who can make a profit without picking the bones of the homeowner. They take time to explain the options of refinancing, auction sale or bankruptcy.

Reputable foreclosure specialists also present the option for short sale, which lets the homeowner get out from under the mortgage payment and move forward with the least long-term financial damage.

Having a foreclosure professional working on behalf of the homeowners gives them a knowledgeable advocate to negotiate for them with the bank or other buyers.