Foreclosure Scams 101: Equity Stripping |
| Date Added: March 26, 2009 10:32:19 PM |
| Author: Charles Richey |
| Category: Mortgage USA: Nevada |
| Foreclosure rates have been rising across the country. Experts are predicting that as the economy continues to get worse, more homeowners will be facing foreclosure in the next year. With so many homeowners in foreclosure or facing the possibility of losing their home, many don’t know where to turn. Some states have taken a proactive approach and made free resources available. Despite there efforts, it has not stopped less ethical business people and scam artists from preying on beleaguered homeowners. Offers of helping a homeowner avoid foreclosure by these individuals often end up costing the homeowner hundreds or thousands of dollars and they end up losing their home anyway. Be a Savvy Homeowner The old adage of it sounds to good to be true, it probably is certainly applies to today foreclosure climate. Homeowners need to use a little common sense. If you are approached by a company or someone claiming to represent a company that will help you avoid foreclosure, do some research first before agreeing to anything. Check out the business with the Better Business Bureau and online. See if anyone has done business with them in the past and if they recommend them. Ask for references from past clients (take these with a grain of salt, they could be shills). Above all else, find out if your state has any free resources to help you before giving anyone any money or signing anything! Equity Stripping Scammers target homeowners that are in danger of losing their home, offering to help them make their payments or a guarantee of a loan. To keep up the ruse, homeowners are often asked to sign complicated, official looking documents to seal the deal. Usually the paperwork involves a deed transfer from the homeowner to the scammer. Variations of the scam have evolved over time, the end result is always the same…the homeowner loses everything. The homeowner may be forced out of the home and the scammer will move in tenants and collect rent until the home is foreclosed on, leaving the homeowner straddled with the debt. The scammer may also “sell” the property to someone, victimizing both the buyer and homeowner. Typically they target buyers that can’t get a conventional loan and require a lump sum down payment. If the property has a lot of equity in it, the scammer will actually sell the home, pay off any debts on the property and make a nice profit at the expense of the homeowner. These scams are typically run by one individual. They’ll have a way to find distressed properties and may run the same scam several times before moving on or getting caught. Eventually the properties are foreclosed on and become property of the mortgage issuing bank. A recent article by the Associated Press quoted the FBI stating that victims of mortgage schemes that contributed to the country's housing crisis have lost more than $1 billion in the past three months. Since March 1st of last year, over 400 people have been arrested as part of an FBI sting. |
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