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| More rates and news from Foreclosure Help Scams Increasing(The increasing amount of foreclosures being filed across the nation is also spurring an increase in the amount of foreclosure scams being reported by homeowners having trouble making their mortgage payments. )
These foreclosure “rescue” scams are companies and people claiming they will help homeowners out of foreclosure, when in reality they are just in it to get the equity from the home.
The scams come in all different forms, but the most common rescue scheme claims it will save homeowners from foreclosure by giving the company ownership of the house for a couple of years. But this leads to disaster.
A November 25, 2006 article by Lingling Wei of The Wall Street Journal, “The ‘helpers’ want your house,” discusses how a growing number of these scams are being reported as these fraudulent lenders offer help.
“As the number of foreclosures rises, homeowners unable to make their mortgage payments are facing another growing threat: ‘foreclosure rescue’ scams.”
“State and federal authorities say they are investigating an increasing number of homeowner complaints about fraud and deception by companies that engage in lending to financially distressed borrowers seeking to avoid foreclosure. Several states have recently passed or are contemplating new laws to provide more protection against dishonest businesses trying to take advantage of already vulnerable homeowners.”
Homeowners looking for help from a foreclosure are undoubtedly doing the right thing, they just must be very weary of any company claiming “no credit checks” or “foreclosure help for free,” or any other sketchy gimmicks that seem too good to be true.
Many of these foreclosure rescue companies attract their business with flashy flyers or internet and newspaper ads.
The most common scam struggling homeowners have been reporting goes like this:
“According to some recent cases filed by consumers and regulators, the companies mislead borrowers into believing they can save their homes from foreclosure in exchange for a transfer of the title for a year or two. The companies promise borrowers they can stay in their homes by paying rent for that period, giving them time to catch up financially until they can buy back their property. Often unknown to the borrowers, however, the companies may have sold their homes to a third party, stripping out the home equity and leaving the borrowers on the verge of eviction.”
The next thing that these homeowners know is that they no longer hold title to the home and their equity is completely long gone, leaving them homeless.
The reason why we are seeing an increase in scams like the one described above is because more and more homeowners are falling behind on their payments. Many people accumulated a sizeable chunk of equity during the housing boom from about 2000-2005 when home values went through the roof.
Now as the market has cooled, many people are finding it increasingly difficult to keep up with monthly mortgage payments, especially those with adjustable-rate mortgages, thus leading to an increase in foreclosure fraud.
“The scams are getting a boost as the housing boom fades and the numbers of past-due mortgage loans and foreclosures climb. Foreclosures historically have hit mainly homeowners with weak credit ratings. But now, a wider range of borrowers are struggling to pay off high-priced loans that lenders churned out during the boom. Online foreclosure-data service RealtyTrac says more than one million borrowers have seen their properties put in foreclosure so far this year, up 27% from the same period last year.”
Homeowners facing foreclosure need to be extremely aware of any company who wants to help them. They should research the company thoroughly and enlist a second opinion before signing any papers.
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