As foreclosure proceedings have become more prevalent, the State of Hawaii Office of Consumer Protection has seen an increase in unfair and deceptive foreclosure rescue transactions in Hawaii.
Foreclosure Rescue Scams
These schemes are typically initiated when businesses or professionals claim to assist consumers who are facing foreclosure by offering replacement financing or “creative” transactions that, it is promised, will save the family home. These are often buyers who may try to obtain your home for an amount far below fair market value or who may try to convince you to sign over ownership of your home as part of a complex refinancing arrangement. These “rescuers” often attempt to make a quick profit or commit outright fraud by preying on a homeowner’s financial and emotional distress.
The eventual transaction actually transfers title of the home from the owner to the foreclosure rescuer or a “straw” purchaser arranged by the rescuer. The straw purchasers then obtain mortgage loans, permitting the individuals facing foreclosure to continue living in their property for a limited time, and promising the individuals that they will be able to later reacquire their homes. In many cases, the promises of maintaining home ownership are deceptive and homeowners eventually face the loss of their home to the so-called “rescuer.” Be wary of responding to advertisements such as “We Buy Houses for Cash” or “Avoid Foreclosure.”
Loan Modification Scams
The Office of Consumer Protection has also seen misleading advertisements that promise false success rates to help consumers avoid foreclosure or obtain a loan modification. Individuals or businesses will illegally solicit the payment of advance fees for loan modifications or other foreclosure avoidance services, which is in violation of state law. Add to this, some of these advertisements have come from companies claiming to be affiliated with the government or a bank, when in fact that is not the case. Be suspicious of anyone who approaches you by letter, by phone, or who simply shows up on your doorstep.