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Tips
for Avoiding Mortgage Foreclosure Rescue and Loan Modification Scams
Watch Out for the Common Foreclosure Rescue and Loan Modification
Scams
Lease-Back or Repurchase Scams
In this scenario, a promise is made to
pay off your delinquent mortgage, repair your credit and possibly pay off credit
cards and other debt. However, in order to do this, you must “temporarily” sign
your deed over to a “third party” investor. You are allowed to
stay in the home as a renter with the option to purchase the home back after
a certain
amount of time has passed or your financial situation improves. The trouble
is once you have signed away your rights in your property, you may not
be able to repurchase the property later, even if you can and want to. After
the new
owner takes ownership of your property, the new owner can evict you. Furthermore,
the scammer is under no obligation to sell the house back to you. Typically,
after the deed is signed away, the property changes hands numerous times.
The scammer may have taken a new mortgage out on your home for hundreds of
thousands
of dollars more than your mortgage, making it impossible for you to buy
back your home.
Partial Interest Bankruptcy Scams
The scam operator asks you to
give a partial interest in your home to one or more persons. You then make
mortgage payments to the scam operator in lieu of paying the delinquent
mortgage. However, the scam operator does not pay the existing mortgage
or seek new financing. Each holder of a partial interest then files bankruptcy,
one after another, without your knowledge. The bankruptcy court will issue
a “stay” order each time to stop foreclosure temporarily. However,
the stay does not excuse you from making payments or from repaying the
full amount of your loan. This complicates and delays foreclosure, while
allowing the scam operator to maintain a stream of income by collecting
payments from you, the victim. Bankruptcy laws provide important protections
to consumers. This scam can only temporarily delay foreclosure, and may
keep you from using bankruptcy laws legitimately to address your financial
problems.
Refinance Scams
While there are legitimate refinancing programs
available, look out for people posing as mortgage brokers or lenders and
offering to refinance your loan so you can afford the payments. The scammer
presents you with “foreclosure rescue” loan documents to sign.
You are told that the documents are for a refinance loan that will bring
the mortgage current. What you don’t realize is that you are surrendering
ownership of your home. The “loan” documents are actually deed
transfer documents, and the scammer counts on your not actually reading
the paperwork. Once the deed transfer is executed, you believe your home
has been rescued from foreclosure for months or even years until you receive
an eviction notice and discover you no longer own your home. At that point,
it is often too late to do anything about the deed transfer.
Internet and Phone Scams
Some scam lenders convince you to apply for
a low-interest mortgage loan on the phone or Internet. They then
extract vital information, such as 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, putting
you at risk of identity theft, and your home is still at risk of
foreclosure.
Phantom Help Scams
The scam operator presents himself as someone who is able to help
a homeowner out of foreclosure or qualify for a government loan
modification or refinance program. In
exchange for his or her “services,” outrageous fees are charged
and grand promises are made for robust representation, which never occurs.
The “services” performed entail light paperwork or occasional
phone calls that you could easily have made yourself. In the end,
you are worse off than before, because you have little or no time to save
your
home, or seek other assistance.
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