Foreclosure rescue scam
A foreclosure rescue scam targets homeowners facing foreclosure — a population that is identifiable from public records, under time pressure, and often holding equity.
Minnesota enacted chapter 325N in 2004 specifically to address these schemes.
How the targeting works#
It is not clever. It is public.
A notice of pendency is recorded. A notice of foreclosure sale is published. Both name the property and both are available to anyone.
From that, a solicitation list writes itself. Letters arrive, doors get knocked, calls come. Some of it is legitimate. Some is not, and the two look alike from the doorstep.
The two main forms#
Fee-for-service. An upfront payment to negotiate with your servicer, stop the foreclosure, or obtain a modification. Often paid, frequently followed by nothing.
Equity extraction. The homeowner deeds the property to someone who promises to save it, with a lease and an option to buy it back on terms that could never be met. The house and the equity are gone; the rent is higher than the mortgage was.
The warning signs#
An upfront fee. The clearest one. HUD-approved counselling is free. Applying to your servicer is free.
Being told to stop talking to your servicer, or to send payments somewhere else. This isolates you from the only party who can actually cure the default.
Pressure to sign quickly, particularly near a sale date.
Any request to sign a deed or transfer title as part of "saving" the house.
A guarantee. Nobody can guarantee a servicer's decision.
Blank spaces in documents you are asked to sign.
What the law gives you#
Five business days to cancel a contract with a foreclosure purchaser, under Minn. Stat. 325N.13 — and the clock does not start until the contract complies and all parties have executed.
Cancellation effective on mailing, by any means, in writing.
Any deed executed before a timely cancellation is void.
Waiver is void except in one narrow case requiring a handwritten statement signed by all title holders where a sale falls within the five days.
If you have already signed#
Act today rather than tomorrow.
Send written cancellation by any means available and keep proof. Contact a lawyer or a HUD-approved housing counsellor immediately. Legal aid organisations in Minnesota handle these cases and the help is free for those who qualify.
The five-day window is real and it is short, and it does not run at all where the contract failed to comply — which many do.
The reliable rule#
Legitimate foreclosure help costs nothing.
Housing counselling is free. Your servicer's loss mitigation process is free. Legal aid is free for those who qualify.
If someone is charging you in advance to save your house, they are charging for something you can get at no cost from people whose advice is not attached to a transaction.