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The creative tactics that foreclosure scam companies use to steal money and trick innocent homeowners out of their houses would be entertaining if the results were not so tragic. From phony documents and forged quitclaim deeds to pointless mitigation services and companies that change their name every other week, the number of potential scams seems endless.

One group of scammers, though, had put a 19th century spin on this 21st century foreclosure crisis. A San Diego, California based company called Federal Land Grant Company that has been shut down by that state's attorney general persuaded homeowners to transfer the deed to their house into a vehicle called a "land grant." This vehicle is absolutely fraudulent and has not been used in over one hundred years.

For some historical background, the Federal land grant system was used during the colonial period to encourage settlers to move into and develop newly acquired property. As America expanded further westward, it ended up with vast swaths of mostly empty, unsettled land and used this system to encourage further expansion. It was also used to facilitate industry and transportation, with four out of the five transcontinental railroads being built with assistance from the land grants.

But this type of instrument has not been used since the 1800s and is no longer recognized by any competent court or county government. However, this company charged $10,000 per house to be transferred into the land grant, had the homeowners sign over the deed to their house, and then had the audacity to charge rent. All for a completely fraudulent scam.

Using documents from hundreds of years ago, the company persuaded homeowners that this phony solution would actually prevent the bank from being able to take the house back through foreclosure. In the end, many of the victims were simply evicted from the house after the court proceedings and sheriff sale. Transferring ownership of the property, whether through legitimate or phony documents, does not transfer the responsibility of paying the mortgage.

This should be a stern warning to homeowners against trusting any company that offers a solution to foreclosure that seems too good to be true. Just because a company offers weekly seminars and uses complicated terms to describe their "unique," "creative," "proprietary" process does not mean that the company has anyone's interests at heart besides its own.

At the very least, before considering transferring ownership of a property to stop foreclosure, homeowners should consult with their own legal counsel. Deed transfers, land trusts, land grants, quitclaim deeds, or whatever term the scammers use should all be reviewed by someone competent to read and understand the contracts and the ramifications of entering into such agreements.

This Federal Land Grant Company had tricked over 300 homeowners into transferring their properties into the phony system. This means that 300 properties have now been transferred out of the hands of the original owners who are still facing foreclosure on these houses. If any of them had consulted with an attorney or knowledgeable real estate professional before entering into the agreement, they could have avoided this situation.

Now, for the majority of these homeowners, matters are much worse. They do not currently own the house but have to find some way to avoid losing it to foreclosure. Without a clear title, refinancing, selling, or even offering a deed in lieu will be much more difficult. And although this particular scam will be forced to shut down and may have to to provide refunds to their clients, they will have been responsible for the loss of a significant number of homes.

Staying away from foreclosure scam operators is not easy when faced with the loss of a home. Desperation to save the house and ignorance of how the foreclosure process works contribute to homeowners being more susceptible to these scams than they would be otherwise. If ownership of a house is to be transferred, though, homeowners should consult with a competent legal adviser and clearly understand what will happen to the mortgage if they no longer own their home.

The ForeclosureFish website has been created to provide homeowners in danger of losing their properties with relevant and timely foreclosure help and news. The site examines numerous solutions that may be used to save a home, such as bankruptcy to stop foreclosure, deed in lieu, cash for keys, foreclosure loans, and more. Visit the site to read more articles about how foreclosure works and how the process may be avoided before it is too late: http://www.foreclosurefish.com