Friday May 26, 2017

Foreclosure 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 scams:

#1 Promise To Pay

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:

  1. Having a stranger approach you with an unsolicited "rescue" offer.
  2. Obtaining an unsolicited call, mail or circular about "foreclosure rescue" or saving your house.
  3. Taking part in a complicated deal that you don't fully understand.
  4. 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.

# 2 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:

  1. Do not send money to someone unless you know precisely what you are getting.
  2. Do not sign papers that transfers the title of your property to anyone else.
  3. 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.

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