Now that we’ve
warned you a bit about mortgage foreclosure scams in general, let’s talk about
some specific scams to be on the lookout for.
First,
understand that there are two general kinds of scams out there that purport to
help you avoid or stop a foreclosure.
One kind of
scam is designed to get title to your property so that the scammer can strip
out whatever value is there. The second kind of scam just tries to get you to
pay money for one reason or another, for one frivolous “service” or another.
In this blog
we’ll look at the scammer that tries to get title to your property. Since once
a scammer gets the title to your property they can do with it as they please,
this is an incredibly dangerous scam. Not only are you deprived of your
property, but you lose the ability to pursue legitimate avenues to address the
foreclosure. And never forget the difference between a note and a mortgage. If
you no longer own the property a mortgage foreclosure may not be all that much
of a concern, but regardless of how the foreclosure turns out, you remain
personally liable on the note.
So how do
these scams work? As with crooks across the board, if you can conjure up a
scenario, it probably has been used or at least tried.
Typically a
homeowner with an actual or impending foreclosure is approached by someone
offering to help them with their problem. They point out that because a
foreclosure has been commenced (or the mortgage payments are way very far
behind) that the homeowner’s credit is not good enough to allow him to
refinance and pay off the loan being foreclosed. The solution? Deed the
property to an “investor” with sterling credit. For what appears to be a very
reasonable fee, they will then refinance the houses and then “sell” it back to
the homeowner. While this is happening the homeowner is allowed to remain in
the house as a “renter”.
Will that
ever happen? OF COURSE NOT!
As soon as
the “investor” has title to the property they will use it to their advantage.
If there is substantial equity in the property they will refinance it, or take
out a second mortgage, pocketing the money. If that is not possible, they will
rent the property (after evicting the homeowner). They may sell the property to
someone else on a land contract, charging a very low down payment followed by
monthly payments made to the scammer.
The common
threads of course are that the homeowner has lost their property, the
legitimate lender is not being paid and any value in the property, whether in
the form of financeable equity or monthly income goes to the scammer.
Since the
mortgage crisis of 2007-2008 there have been numerous government programs
instituted to help homeowners in trouble with mortgages. These usually involve
some form of re-negotiation of the mortgage, or arrangement to pay arrearages
over time.
The single
most important thing to know is that none of these remedies or programs… that’s
right NONE – not a single one, require you to transfer the title of your home.
So the
moment someone approaches you and even hints that the “way out” is to deed the
property to someone else, that should be a giant red flag and you should show
them the door.
As a reminder. If you are facing foreclosure, and if you are approached by anyone suggesting that you transfer title to your home, Be Your Own Lawyer, as a service to you, will review your situation, and advise you concerning any "help" offer you may have received, at no cost.
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