Mortgage Trouble Said to Bring Scammers Calling

April 22, 2006 — -- Janice McKay supports eight family members by working two jobs in Brooklyn, N.Y., and when she lost one of her jobs, she started falling behind in her mortgage payments.

"I was stressed and anxious," she said. "I felt like things were closing on me."

So when a sales team came to her door offering to take over her payments, she jumped at the chance. The catch was that she had to sign her home over to them. They promised it was only temporary.

"This was my savior," McKay said. "It would put me right back on the right track."

But they did not pay the mortgage and McKay is now facing foreclosure.

Authorities say scams like this are on the rise as more homeowners find themselves in trouble.

That's because buyers tempted by adjustable-rate mortgages back when interest rates were low are now facing much higher payments.

That has made them easy prey for unscrupulous lenders.

Nationally, more than 323,000 homes were in some stage of foreclosure during the first quarter of this year, up 72 percent from a year ago.

At least one state is taking action. Indiana just passed a law cracking down on so-called "We buy homes" scams.

"These foreclosure consultants prey on people who aren't the most sophisticated," said Indiana Attorney General Steve Carter. "They [homeowners] are having financial difficulties and they don't have the resources to hire somebody to help them through the process."

Most people are at risk of foreclosure in the first five years of owning their home, experts say. Often unexpected things happen, like having a baby or having to make a major repair in the house.