If your mortgage company is threatening foreclosure, there are things you can do to avoid it (see my article titled How to Avoid Foreclosure). However, you should be aware of scams. If there are solutions to your problems that seem too good to be true, they probably are.

For example, if you're trying to sell your home yourself without professional guidance, beware of buyers trying to rush you through the process. It is unfortunate, but there are people who will try to take advantage of your financial difficulty. You should be especially alert to these scams:

Equity Skimming.

In this scam, a person approaches you as a buyer, offering to get you out of financial trouble by promising to pay off your mortgage or to give you a sum of money when the property is sold. This person may suggest you move out quickly and deed the property to him or her. The buyer than rents the property, collects rents for a time, does not make any mortgage payments, and allows the lender to foreclose. The important thing to remember is that signing over your deed to someone else does not necessarily relieve you of your obligation on the mortgage loan.

Phony Counsel ling Agencies.

Some organizations may approach you saying they are counseling agencies. They will offer to perform certain services for a fee. These may very well be services you could do yourself, such as negotiating a new payment plan with your lender or pursuing a pre-foreclosure sale. If you feel counseling could help, forget those companies that charge fees, and try to find a local, non-profit credit counseling organization in your city. Most cites have at least one that is backed my local merchants and require no fees.

Precautions you can take

Here are some things you can do to avoid a foreclosure scam.

1. Don't sign any papers you don't understand

2. Make sure you get all promises in writing

3. See a lawyer or your mortgage company before entering into any agreement involving your house.

4. Beware of any contract of sale or loan assumption where you are not formally released from liability for your mortgage debt.

5. If you're selling the house yourself, to avoid foreclosure, contact your state's attorney general, the state real estate commission, your local Better Business Bureau, or your district attorney's consumer fraud division to make sure there are no complaints against the prospective buyer.

The main things to remember

Don't lose your home and damage your credit history

If you are receive a letter from your mortgage company threatening foreclosure, contact the company immediately.

Stay in your home to make sure you qualify for assistance.

Explore every alternative to keep your home.

Be aware of scams.

Do not sign anything you don't understand. And remember that signing over the deed to your house to someone else does not necessarily relieve you of your loan obligation.

Always remember that foreclosure can be avoided. There are things you can do yourself to save your home. And be sure to avoid foreclosure scams.