By definition, a foreclosure and pre-foreclosure investor is not a scam artist. Foreclosure investors either buy a property before it goes to auction - therefore saving the owners from claiming foreclosure - or at auction once the property has been foreclosed. The idea is that the homes are purchased at less-than-market value and can then be sold again at a profit.

So, where's the scam? There isn't - foreclosure and pre-foreclosure investing is perfectly legal and actually a fairly savvy way to make money in the real estate market. However, when unethical con artists and predatory so-called "investors" begin to prey on unfortunate families, that's where the scams begin. Keep reading to learn about some of the common foreclosure scams and how you can avoid them if you wish to invest in foreclosure properties.

Scam 1 - Foreclosure Protection Fees

Don't pay someone to stop your foreclosure process. You may see ads in the paper saying they can help, negotiate with the banks or protect you from foreclosure, but you should never have to pay someone up front.

Instead, utilize your local and state services or the Department of Housing and Urban Development, which should all offer foreclosure counseling and protection programs that you can access. For more information on where you can find a Department of Housing and Urban Development (HUD) Housing Counselor for free, visit http://www.hud.gov/offices/hsg/sfh/hcc/hcc_home.cfm or call 1-800-569-4287.

Scam 2 - Deed Theft

One of the most common mortgage and foreclosure fraud schemes is deed theft. Troubled homeowners are tricked into signing over the deeds to their home with the promise that if they continue to make reduced payments, they'll eventually get their home back.

The con artist then either allows the house to go into foreclosure or turns around and sells it.

Scam 3 - Foreclosure Investment Clubs

This is a scam that seeks individuals wishing to cash in on foreclosure investment profits. Essentially, investors are lured or tricked into joining a foreclosure investment club that pools their money together to buy pre-foreclosure and foreclosure homes.

Then, the houses are either never bought or they're bought and later sold to fictitious buyers, and the return on the investment is reported as minimal. In the first scenario, the con artist walks away with the cash. In the second scenario, he walks away with the property, which only cost him a song.

If you think you may be a victim or potential victim of a foreclosure fraud scam, contact your local police, your lender and a local housing counselor for help and advice.

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