Foreclosure Fraud, Advance Fee Loan Scams and Identity Phishers

There is a rising trend of fraudsters and thieves who make use of the current credit crisis in the home loans and mortgage sectors for their own ends to either scam money from you or to even try to steal your identity. It is important to understand that despite your current situation being however bleak it is when it comes to your cash flow that becoming a victim of these crimes/fraud activities is many times worst than struggling with your current bad credit loans.

What are the Common Types of Scams?

By far the most popular scam that revolves around the bad credit issue are those that we see in our junk mailboxes everyday. The emails look real, the sites that they re-direct too also look real but once you send over all your private information you're dead in the water. The least harmful of these is the advance fee scam, where the "lender" will ask you to send over a small "processing fee" to get the loan approved. Unfortunately, once the "advance fee" is sent, the loan will be "rejected" and the customer will have been cheated.

The worst of the scams are identity phishers where all your personal identification details will be collected and used to take out other loans or credit cards in your name. You'll have no idea about it until the scammers have taken a good amount of money in your name and left you to pay the bills. Sometimes the bank or lender will waive these unauthorized transactions but sometime the victim will be left with the bill and a severely broken credit rating.

One relatively new type of scam is the “foreclosure scams”. Most people who are teetering on the edge of bankruptcy often suffer from tunnel vision syndrome and reach out to any possibility of aid even if the source is from a less than credible source. Many of these foreclosure scammers pose as credit repair and negotiation experts who promise to get you out of your situation by using their powers of negotiation with the banks or other lenders for a certain price. Once they have convinced you to turn over your precious money they will do only do routine tasks that you can even do then report sadly that they have not succeeded because your case is one of the “worst they have seen”.

Another type of fraud that is related to foreclosure scams are refinancing fraud schemes. Often the last ditch effort for people in order to avoid bankruptcy is to refinance their loans. The fact is that refinancing when you are at the verge of bankruptcy is extremely difficult thus opening the door up for those scammers to step in. Scammers know that these people are already highly stressed and will generally accept any arrangement that they can just to keep themselves afloat. Sometimes these aren't scams per se, but loan products with unreasonably high interest rates posing as "emergency loans" or "last chance loans". Ironically these are the type of products that are likely to push an individual over the edge

Scammers will also pose as credit renegotiation experts that have inroads with banks and lenders who will sell their service to you for a fee.  These scammers will say that they are going to improve your credit score and also to help you with getting better financing down the road since you're likely to suffer from a bad credit rating now. These “experts” to get you to sign a document that allows them to drain the equity of your home and often ending up in the victim losing their homes that they have tried so hard to keep.

These scams and fraudsters will prey on you at your most vulnerable time and use classic bait-and-switch tactics in order to obtain what they want then leave you to weather the outcome yourself. You should be very careful with lenders that aggressively pursue you or even agents that keep on pushing you to sign up for their service. Most lenders or legitimate service agents don’t push for their loans or services as it is against the law to chase down customers in most countries.

How to Avoid these Scams?

Think of your personal details as sacred. Noone should have them unless they truely deserve to have it. Never offer out your personal details to some company that has emailed you an offer over the internet. Be 100% sure that the person or company that you are handing over your personal details too is legitimate.

Nearly all legitimate loan or credit card offers do not require up-front or advance payment for any product. This just doesn't happen in the real world. It's like going out to get a job and the employer asking you to pay them to consider your request. Just doesn't happen. Most of these scammers will also ask you to pay them using payment portals like Western Union or MoneyGram. These channels are almost completely untraceable and any money sent through is never returnable.

Who are these Scammers?

The majority of these phishers aren't organized syndicates but rather individuals that would gather the data then re-sell it to the crime syndicates for a profit. The advance loan scammers are usually are criminals in other countries that will get you to send the cash over to them internationally. For the most part, these scammers are hard to catch and hard to bring to law because of the different (often 3rd world) countries that they live in.