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BEWARE OF THESE 5 COMMON FORECLOSURE SCAMS

Harris-Courage & Grady, PLLC Oct. 8, 2015

Are you behind on your mortgage payments? The threat of foreclosure is a very stressful, frightening thing to deal with. Unfortunately, there are people out there who attempt to prey on those who are in danger of losing their homes. Be careful to make sure you aren’t taken in by one of these foreclosure scams.

Common Foreclosure Scams:

  1. Equity Stripping. A mortgage lender who knows about your financial difficulties may push you to get a larger mortgage to pay off the original mortgage(s). This new mortgage will have even bigger monthly payments than original mortgage. It will only be a matter of time before you have difficulty making the payments. The new lender will then take your home. You won’t have much, if any, equity left because the new loan was large enough to swallow it all up. The equity has effectively been ‘stripped.’

  2. Lender Scams. Your lender may suggest refinancing your home with an interest-only payment plan. This can be great, for a while. Your payments will be much lower at first. Eventually, there will be a large balloon payment due, and most people can’t afford it. Interest-only mortgage payments just make a bad situation worse.

  3. Equity Skimming. A buyer may convince you to sign your property over in exchange for making your payments. The buyer will then rent out your property and start collecting rent. The buyer will not make your payments as promised and the lender will foreclose. If someone is offering to buy your home in a non-traditional way, consult an attorney to make sure the offer is legitimate.

  4. Loan Flipping. Your lender may encourage you to refinance your loan, with the enticement of getting extra cash for home repairs or a vacation. However, the additional fees and costs associated with a refinance are significant and may be greater than any benefits you receive. This is simply a way for a lender to extract more money from you before foreclosing on your home.

  5. Phony Loan Transactions. An unscrupulous lender refinances your loan and provides documentation that gives the appearance of bringing your loan current. Sometimes, these documents actually transfer your home’s title to the company for a very small payment. It’s vital to read all the fine print before signing any loan documents. If you need help understanding loan documents, consult an attorney.

If your home is in danger of foreclosure, there is frequently a solution and a way to save it. Don’t fall victim to one of these scams. Call Harris-Courage Grady Solutions so we can discuss the best way to help you with your financial difficulties.