Foreclosure Fraud Schemes
Mortgage
scams are getting more common. To protect your property
and your homes equity it's exceedingly important to understand the
signals of property fraud. Being able to report property fraud
to the proper state and federal agencies is critical if they are to
have any chance of keeping the scam artist from preying on innocent
borrowers.
Scam artists can often go after homeowners who are already
hard-pressed to meet their mortgage commitments or are in hurry to
sell their homes. There is always help available when facing
financial problems or
foreclosure, simply make
sure you are dealing with a respectable company before getting
involved. Fraud scams might sound like a great deal initially,
but unfortunately their ultimate goal is to separate you from your
home, never to help you keep it.
Below are two of the the most
common fraud scams being used today:
Foreclosure Rescue Scheme
If you have started falling
behind on your loan payments, this could look like an appealing
solution, but watch out. A foreclosure rescue scheme
frequently begins with a scam artist offering a promise to pay off
the overdue mortgage loan, allowing you to remain in the house as a
renter with the choice to purchase the house back when your
financial situation improves.
What actually materializes is a series of steps designed to take
the equity out of the home and vanish. As part of the
"rescue," the property owner will be required to deed the home to a
new borrower who is often "investing" in a rental property, but who
is actually part of the scheme. The profits from the sale will
payoff the delinquent loan and the new borrower withdraws all the
equity in the home, never to be seen again.
The distressed homeowner is now just a renter in a home they no
longer own, unaware that the new borrower is not even making
payments. When the new owner never makes a payment on the
loan, the past homeowner is
evicted from the home and they have lost the home and all the
equity in it.
Scam artists are very crafty people and will oftentimes alter the
scheme depending on the property owner they talk to, be very
cautious. A few of the warning signs that a scam artist could
be trying to set you up as a victim of a foreclosure rescue scheme
are:
- Having a stranger approach you with an unsolicited "rescue"
offer.
- Obtaining an unsolicited call, mail or circular about
"foreclosure rescue" or saving your house.
- Taking part in a complicated deal that you don't fully
understand.
- Signing documents that have blanks or false statements.
Regardless of what you are told, this is never tolerable.
The safest answer when you face financial troubles that may
endanger your house is to always speak to your lender or a
well-thought-of financial counselor.
Illegal Flipping
Flipping is a recognized practice where an investor buys a house
which is in demand of repairs or upgrades, makes the essential
modifications to the property in a short amount of time and sells
the property for a gain.
We've all seen the TV shows about flipping and they're great fun
to watch, but there are scam artists who use flipping to make money
illegally. Frequently, the scam artist will offer more than
the market value of a home with a precondition that the "extra" sum
above the asking price is returned back to the buyer at closing.
At closing, the exaggerated value of the house will be attributed
to home improvements that were in fact never done. The scam
artist will pocket that surplus money and never make a payment on
the loan causing him to default on the mortgage loan.
Regrettably, many foreclosure victims have a tough time
recognizing the real solutions from a typical scam.
Follow these three easy rules:
- Do not send money to someone unless you know precisely what
you are getting.
- Do not sign papers that transfers the title of your property
to anyone else.
- Get the particulars of your transaction, along with all
guarantees and/or promises in writing.
If you feel you are a victim of lender misconduct or
predatory lending, trust your instincts and ask for help.