On April 14, the Office of Thrift Supervision (OTS) issued an alert to consumers with advice regarding the avoidance of foreclosure rescue scams typically undertaken by companies or individuals who refer to themselves as “foreclosure consultants” or “foreclosure specialists”. The alert, entitled Foreclosure Rescue Scams: How to Avoid Becoming A Victim, notes that this type of fraud is increasing as U.S. foreclosure rates increase.  

According to the OTS’ release, three types of scams are common: (i) phantom help – the purported company or individual charges high fees for no work or for services the homeowner could have undertaken on his own; (ii) bailout – a homeowner surrenders his title to the home after receiving false assurance that he can remain as a renter and buy back the property later; and (iii) bait and switch – consumers are told they can refinance their homes but instead sign documents that transfer title of their properties to scam companies while the consumers remain responsible for the mortgage payments.  

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