How to Spot and Avoid Foreclosure Scams in New Jersey
Scammers read the public foreclosure listings, too. If you are receiving unsolicited calls or letters promising to “stop foreclosure immediately,” you are likely being targeted.
When you are facing the potential loss of your home, you are in a state of high stress. Unfortunately, predatory companies know this. In New Jersey, public records of foreclosure filings are easily accessible, leading to a flood of mail and phone calls from scammers promising “guaranteed” results. These bad actors often strip the remaining equity from your home or trick you into signing over your deed.
At Friscia & Associates, we believe that informed homeowners are protected homeowners. Here is exactly how to distinguish between a legitimate foreclosure defense attorney and a scam artist.
The 4 Most Common Scams in NJ
1. The “Phantom Help” Scheme
The scammer claims they can negotiate a loan modification or stop the Sheriff Sale, but they demand a large fee upfront. Once you pay, they do little or nothing. By the time you realize they haven’t contacted your bank, the sale date has arrived.
The Law: In New Jersey, under the Foreclosure Rescue Fraud Prevention Act, it is generally illegal for non-attorney “foreclosure consultants” to collect upfront fees before completing the services they promised.
2. The Lease-Buyback (Deed Surrender) Scam
This is the most dangerous scheme. The scammer tells you to sign the deed over to them so they can “pay the mortgage” while you rent the house back from them. They promise you can buy it back later once your credit improves.
The Reality: Once you sign the deed, you lose your ownership rights. The scammer usually strips the equity out of the home, fails to pay the mortgage anyway, and eventually evicts you. Never sign your deed over to a third party without your own lawyer reviewing the documents.
3. The “Forensic Audit” Scam
These companies claim that for a fee (often $2,000+), they will have a “forensic auditor” review your mortgage documents to find errors that will force the bank to cancel your debt.
The Reality: While errors do exist, a forensic audit alone rarely stops foreclosure. Only a qualified attorney filing a contesting Answer in court can leverage those errors into a defense.
4. Fake Government Programs
Scammers create websites that look like official government portals (using logos like HUD or HAMP). They ask for your social security number and financial data, leading to identity theft. Remember: Government agencies will never charge you a fee to apply for assistance.
Red Flags: When to Run Away
If you encounter any of these warning signs, end the conversation immediately:
- Guarantees: No legitimate professional can guarantee a specific legal outcome. If they say “We guarantee to stop the sale,” it is a scam.
- “Don’t Talk to Your Lawyer”: If a company tells you to stop communicating with your lender or your current attorney, they are trying to hide their activities.
- Wire Transfers: Be wary of anyone asking you to wire money or pay via prepaid gift cards.
How to Verify a Professional
Before hiring anyone to help save your home, perform your due diligence:
- Check the Bar Association: If they claim to be lawyers, look them up on the NJ Courts website to ensure their license is active and in good standing.
- HUD-Approved Counselors: Housing counselors approved by the U.S. Department of Housing and Urban Development (HUD) provide advisory services for free or low cost.
- Google Reviews: Search the company name + “scam” or “complaint.”
What To Do If You Have Been Scammed
If you suspect you have fallen victim to a foreclosure rescue scam, you must act fast:
- Contact the NJ Department of Banking and Insurance (DOBI): File a formal complaint.
- Call an Attorney: We may be able to help you unwind fraudulent deed transfers or file emergency motions to stop an eviction caused by a scammer.
Trust Verified Legal Counsel
Don’t gamble your home on a sales pitch. At Friscia & Associates, we are licensed attorneys bound by strict ethical codes. We provide transparent, honest assessments of your options.
Protect your rights today.
Call us at (973) 500-8024 or (212) 960-8308.
