Foreclosure scams to watch out for

What many people crave the most is the comfort and luxury of their homes as well as the company of the family. It may take years to build your dream home and fill it with your family’s memories, but it only takes a few missed mortgage payments to take away your dream.

There are many methods used by these fake companies to swindle homeowners. Let’s go through the tricks that you need to be aware of in case of a foreclosure:

EQUITY SKIMMING

In this scenario, a person who calls himself a buyer stops at your door and convinces you to sell your property to him (usually for less than market value) and promises to pay off your mortgage. The buyer is likely to advise you to transfer the deed of the property to him, move out of the house and stop interacting with your mortgage lender. The buyer will then rent out your property to a third party and start collecting monthly rental payments. Unfortunately, the buyer will make no effort to pay the mortgage payments, thereby allowing the lender to foreclose on your property. The skimming aspect comes into effect if you have a reasonable amount of equity in your property; the scammer will flip the property to pay off the debt and then make a profit by keeping the equity. Remember: Signing a deed over to a third party does not relieve you from your mortgage obligations.

EQUITY STRIPPING

In an equity-stripping scam, an unscrupulous mortgage lender will come to you with an offer to get you a loan; this person is usually aware of your poor financial condition. The lender pushes you to exaggerate your income on the application form to get the loan approved. You accept the loan because you need the money, even though you aren’t entirely sure that you can afford the monthly payments. The moment you default on your mortgage payments, the lender will rush in to foreclose your property and strip you of your home’s hard-earned equity.

PHONY COUNSELING AGENCIES

You may find a large number of phony counseling agencies that offer their services–for an outrageous fee. But all they do is make some inexpensive phone calls and complete paperwork. These agencies may negotiate a repayment plan with your lender or organize a pre-foreclosure house sale on your behalf. However, the jobs these companies perform can all be easily performed by the homeowner without the additional cost. The main aim of these agencies is to mislead and stop you from getting real help. So take care that you confirm that an agency is genuine before using its services, and never pay up front for foreclosure services.

PHONY LOAN TRANSACTIONS

In a phony loan transaction, a lender introduces you to a refinancing loan document that claims to bring your neglected loan current. However, the document may transfer the title of your home to the company’s name for a very small part of its value. Many times, the loan’s terms will include prepayment penalties, balloon or interest-only payments, huge fees, and immediate rate adjustments. Therefore, it is prudent to get all legal documents assessed by your attorney before signing them.

 

LOAN FLIPPING

In this type of scam, your lender may offer to refinance your loan and tempt you with some extra cash. If you fall for the trap and consent to get your loan refinanced, as soon as you make some payments, the lender will persuade you to refinance your loan again and offer you more cash for vacations or home renovations. You accept this attractive offer, take the cash and get your previous loan refinanced. In reality, this extra cash may be much less than the additional fees and costs your lender is charging for refinancing your loan. In this scam, your lender may not even make any attempt to explain to you that the increase in the loans imply added fees and points for refinancing, higher interest rates or even prepayment penalties each time you take a loan. In short, repetitive refinancing could put you deep in debt and may ultimately lead to the foreclosure of your home.

INTERNET AND PHONE SCAMS

Some con lenders convince you to apply for a low-interest mortgage loan on the phone or Internet. They then extract vital information about your Social Security and bank account numbers. In this scam, the loan is immediately accepted, after which you start faxing the documents and sending wire transfer payments to the phony company without even meeting the lender. Unfortunately, this scam will put you in twice as much trouble–your personal details have been stolen or sold, and your home is still at risk of foreclosure.

 

These and some other forms of foreclosure scams are reasons why you must consult a third party before jumping at any offer that could turn out to become a scam and rid you of your home and possibility of not fulfilling your dream of the comfort and luxury we spoke of earlier.

Foreclosure is a grave issue and if not addressed immediately, can leave you exited from your home with a damaged credit score. Get help today!!!