When the notice that you are in default has been recorded (made public record at the courthouse or county recorder’s office), you will most likely receive a host of contacts from people wanting to solve your problems by refinancing, helping you sell, or offering to buy your home.
There are two particular scams that are common.
1. First is called equity skimming, or in less polite circles, milking.
Someone offers to buy your home right now by giving you enough money to move and maybe a little more. You are not going to get anything otherwise, so it sounds like a good deal. You give a deed and move out. The milker then rents the property until the foreclosure sale and eviction of the tenants.
The problem is that you are now stuck with a deficiency judgment. The amount of the deficiency judgment is also usually greater because of a lower auction sale price due to any damage done to the property by the tenants. Milkers are usually not very particular about screening tenants.
2. The second scam is the phony counselor scam. People will contact you offering services to help you out of your predicament. If they are not really counselors, you will end up selling your home to a milker or will be taken advantage of in some other way. Do not sign anything until you have talked to a knowledgeable person you can trust.