Beware of Mortgage Foreclosure Rescue Scams

April 15, 2008 — -- Dorothy Galbreath lived in a house her husband of 43 years built for her in University Park, Ill., but after his death, she struggled financially to keep up with the mortgage payments. Facing foreclosure, Galbreath accepted the offer of a company that she said contacted her to help with her mortgage difficulties.

"'Mrs. Galbreath, don't you worry. We're going to save your home,'" Galbreath said Alternative Options, the company offering aid, told her.

Now Galbreath is without her beloved home, and she believes Alternative Options took advantage of her.

"I still can't put it into words. It's like a feeling of being crushed," the former homeowner said. "This is 43 years just wiped away, just like it was never there. All my life [was] wiped away like it never existed."

The Illinois attorney general's office said Galbreath's deal showed all the signs of a mortgage rescue scheme. Usually, there are two versions of foreclosure rescue scams. In one, a business approaches you and offers to negotiate with your lender to get you payments you can afford. It charges a hefty upfront fee, does nothing and disappears.

The second version is more dramatic. A business promises to save a home from foreclosure, but the owner ends up signing it over to the company, which is what Galbreath suspects happened to her.

When Alternative Options initially approached Galbreath, she believed it would help her refinance her home, but after waiting more than a month for aid, Galbreath, a school bus driver, got further behind in her mortgage payments. Then she said she learned the company had a different form of mortgage rescue in mind.

Galbreath said she was unaware that she was actually selling her home until she got to the bargaining table in May. She claimed Alternative Options never told her before the meeting that she was selling her house.

"So right then and there, it was either sign the papers or go ahead into the foreclosure," she said.

She did sign the paperwork, and by the time everything was completed, Galbreath had sold her home to Alternative Options for less than its market value. The company then leased it back to her for more than she could afford — her old mortgage payment. She also had the option of buying her home back, but the price was $37,000 more than her selling charge.