NFCC is Warning Against Foreclosure Scam Artists.

Silver Spring, MD -- The very high and rising default and foreclosure rate has introduced to the marketplace fraudulent companies and individuals trying to cash on homeowner fears of foreclosure, the National Foundation for Credit Counseling here said.

Since avoiding foreclosure serves best borrowers, lenders and the mortgage market at large, NFCC warns lenders and servicers, as well as their customers, to exercise caution and rely on financial education as a proven way in preventing abuse by con artists.

According to NFCC, rising foreclosure rates "have led to a growing number of scam artists offering to 'rescue' homeowners in financial distress" using various scams.

"Scam artists can evict a family from their own home and then sell it on the open market before the homeowner has any idea of what is going on," said NFCC spokesperson Gail Cunningham.

These self-proclaimed rescuers initially advise homeowners to cut access to legitimate financial solutions often telling unsuspecting homeowners to stop all contact with lenders, credit counselors or lawyers and let the "rescuer" handle all the details, NFCC said.

Foreclosure rescue scams usually are based on heavily promoted deals that target owners who have fallen behind on their mortgage payments, promising to save one's home or pay the mortgage. In fact, NFCC said, such deals only generate "a quick profit for the scam artist or strip away the value of the home with no benefit to the owner," which is why lenders and servicers also need help informing their clients on how a foreclosure rescue scam works.

After identifying distressed homeowners through public foreclosure notices in the media or at government offices, scam artists contact homeowners by phone, personal visits, cards, flyers, or advertising, telling homeowners they can stay in their house, keep their credit rating or receive instant cash. Usually they try "to make a quick profit through fees or direct mortgage payments that are never passed on to the lender," NFCC said, even "assuming ownership of the property by deceiving the homeowner." Plus, the owner loses the home to foreclosure after it has been drained of equity through fees and charges.