Beware of Mortgage Rescue Fraud

One of the fastest growing white collar crimes these days is Mortgage Fraud. More recently than ever Mortgage Rescue Fraud has seen a big jump in the number of crimes comitted.

Beware! there are predators out there who will take your money and strip away your hard earned equity in your property.

I have worked in the mortgage industry for a number of years and have seen and heard many stories of loan officers doing anything and everything to get loans closed that did not benefit the consumer.

Many of these borrowers get stuck in high interest rate adjustable rate loans that can throw a borrower into financial tail spin when the rate adjusts and the payment goes up even $100.00 dollars or more.

For the people on fixed incomes or that live paycheck to paycheck with very little or no disposable income it exposes them to new type of predator the one that wants to steal your home or equity in it.

MORTGAGE RESCUE FRAUD

Scam #1.In this type of scam, a "buyer" approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The "buyer" may suggest that you move out quickly and deed the property to him or her. The "buyer" then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember, signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.

Many victims of Mortgage Rescue Fraud do not even realize that their home may be worth hundreds of thousands of dollars more than they know. Unfortunately for them, a new breed of thieves is well aware of the value of home equity, and a scam known as deed theft has allowed them to steal homes from thousands of people.

Its not uncommon for people who have been living in their homes for years to have a sudden financial emergency that prevents them from making their house payments. Perhaps a job loss or illness is to blame. The economic downturn of the last five years has left a lot of people struggling to pay their bills, and these are the people that the deed thieves seek. Their flyers promise to help those in danger of having their homes taken through foreclosure. The thieves meet with the homeowners and ask to have the title to the home transferred to them. In exchange, the rescuer will promise to pay the delinquent bills and rent the home to the victim for a year or so at a fair price. During this time, they say, the homeowner can save their money or pay off other bills. At the end of that year, the victim can buy the house back from the rescuer.

This seems like a friendly gesture, except that the rescuer has no intention of selling the home back to the victim. Once the title is signed over to them, they legally own the home. They may evict the victim, sell the home, or borrow against it, and there is little recourse for the victim, who is now nothing more than a squatter. Many of these victims fail to realize that they may have had hundreds of thousands of dollars in equity in their home or that their mortgage company may have been willing to either refinance their home or assist them in some other way with making their payments.

Scam #3. The Foreclosure “Consultant” Scam

In this scam, someone tells you that you should sign over your deed (commonly known as a “quit-claim” deed) to them, to be held in escrow. Then they will have you take out short term loans, and have the proceeds wired to their own accounts.

To make matters worse, the foreclosure “consultant” will promise to renegotiate the homeowners debt, and/or prevent the foreclosure. These “consultants” have the homeowner pay them some combination of an up-front fee, a monthly fee, and/or “rent.” The promised foreclosure relief and debt renegotiation never takes place.

Scam #4. The “Bankruptcy/Foreclosure” Scam According to the U.S. Department of Justice, this is the most common foreclosure scam on the West Coast. The con artist says they can save the homeowners house for a fee of several hundred to a few thousand dollars a month. They have their “clients” sign the bankruptcy forms and tell them they will be working on their behalf, often stating that they will pay the mortgage payments out of their fee. The “client” doesn’t question the actions of the consultant, because, for a time, the foreclosure is automatically postponed by the initiation of bankruptcy proceedings, and the homeowners stop receiving collection calls and letters.

There are two variations on this scam. In the first, a new bankruptcy is partially filed for the homeowners. This automatically stops the foreclosure action. Unfortunately, the bankruptcy process falls through, as no one actually appears in court, and the house is foreclosed on. The second variation simply takes a partial interest in the home (remember: Don’t sign over your deed), and transfers that interest to an individual or business already involved in a bankruptcy.

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Mortgage Rescue Fraud