Avoid scam artists with an eye on your equity

Skyrocketing real estate prices nationwide have created a fertile environment for foreclosure-rescue scams.

For many middle-income families, their house represents their largest financial asset. And experts say that in markets nationwide, this asset has become more valuable than ever.

“For the past two or three years, the equity boom has been substantial, probably more than it ever has been before,” said Bill Merrill, the director of nonperforming loans at Freddie Mac, a loan provider in McLean, Va.

According to federal standards, more than 50 housing markets nationwide are “booming” -- that is, their home values have appreciated more than 30% in less than three years, said Steve Tripoli of the National Consumer Law Center in Boston.

These guaranteed high resale prices have led lenders to extend credit to borrowers unable to bear the burden of monthly mortgage payments, he added. Already strapped, when something goes wrong -- a layoff, a medical emergency, a death in the family -- many homeowners fall into crisis.

“What’s the big pot of money they have left? They’re sitting on it,” Tripoli said. “That’s what the scam artists target.”

Experts offer these tips to avoid being taken in:

* Beware of anyone calling himself or herself a “mortgage consultant,” “foreclosure service agent” or something similar.

* Never sign a contract under pressure. Take the time to review all paperwork thoroughly with the help of an attorney willing to explain every document and who represents your interests only.

* Never sign away ownership of your home (often called a “quitclaim deed”) to anyone without your attorney’s advice. Be especially suspicious of offers to take title to your home as part of a deal to buy it back over time.

* Never make a verbal agreement. Make sure all promises are in writing and get copies of everything.