Thursday, March 22, 2007

Mortgage Foreclosure Scams Part 3 of 7

Another widely used foreclosure "rescue" scam includes a variety of techniques, all of which lead to the homeowner surrendering the title to their house, believing that the "rescuer" will be paying the mortgage payments while you remain in the house as a renter, buying it back over the next few years. The homeowner may even be mislead to believe that surrendering the title is necessary in order to enable someone with a better credit rating than the homeowner can obtain a new mortgage in order to prevent the foreclosure. Typically the buyback is near impossible due to the nature of the terms of the deal, and the homeowner suffers permanent loss of the home, and the "rescuer" makes out with either all or most of the home's equity.

This type of fraud is most prevalent in California, Colorado, Massachusetts, New York, Washington, Illinois, and Washington D.C., although it can happen anywhere. Unless you plan on selling the house to another person, you should not be giving title of your house to them. It is a similar scam to the "car title loans" that you may have either heard of or been in. The car title is surrendered to the "loan" company who charges enormous amounts of interest on a loan not more than the car's Blue Book valuation. Most people who take out this type of loan are unable to obtain a traditional loan, and are therefore vulnerable to the scam. Due to unreasonable repayment terms, the borrower is at risk for the repossession of the car by the title loan company. Sound similar to you?

Sunday, March 4, 2007

Mortgage Foreclosure Scams Part 2 of 7

There are several factors that give opportunity to a predatory lender for fraud. Homeowners in financial distress are the most likely to become a victim of this type of fraud, and I'll cover a few of the ways that scams can take place, and the effects it can have on the homeowner.

One of the ways that a homeowner can be defrauded is when a distressed borrower sees an ad or sign that states something such as: "We Buy Homes", "We Buy Houses - Fast Cash" or "Cash For Houses - Any Situation, Any Condition". These companies can charge enormous fees for simple phone calls and paperwork (which could easily be done by the homeowner). Homeowners are often left with little assistance, and little time left to save their home from foreclosure before they even realize it. Many times it keeps the homeowner from seeking qualified help at all because the "rescuer" has given the homeowner a false sense of security. The "rescue" company leaves the homeowner in a situation that may have been prevented with proper intervention. This particular type of fraud runs rampant in New York, Ohio, Michigan, California, and Oklahoma.

The Better Business Bureau (or BBB) can be of some assistance if you need further information on a particular company's reputation. Again, as I mentioned in Part 1 of this series, don't be afraid to call your lender or mortgage servicing company. They may have some referrals to legitimate help, rather than choosing a "rescue" company to help you spiral into foreclosure. Be wary of any company that doesn't offer contact information other than a phone number.