Homeowners who are faced with difficulties in keeping up with mortgage payments often fear the worst. Facing a possibility of bankruptcy, they are most likely to fall prey to scams. Under a pretense of wanting to help prevent homeowners from further financial woes, scammers will tell you anything that will convince you to give them money or the deed to your home. They will capitalize on false promises to sell their services while leaving homeowners in distressing conditions. These foreclosure consultants are lurking everywhere, waiting for opportunities to strike. This article aims to help in determining and preventing the most used foreclosure scams.
COMMON FORECLOSURE SCAMS
Equity skimming, also known as equity stripping, is a form of predatory lending that gained notoriety in the early 2000s due to the mortgage crisis.
How does Equity Skimming work?
Scammers pose as buyers, who will convince unsuspecting homeowners to sell off their property and offer to take care of the mortgage payments for them. They will not make any mortgage payments and rent out the property instead. The scammers collect the payments, and the victims continue to face foreclosure, affecting their credit rating in the process.
Phantom helpers introduce themselves as mortgage counselors, offering to negotiate with lenders on the current mortgage loan agreement. They will ask for an upfront payment while prohibiting homeowners from contacting their actual lenders. They also convince their victims to pay the mortgage directly to them. This way, the scammers have possession of the homeowner’s money, the lenders are never contacted, and the homeowner still faces foreclosure.
Lease and Buy Back
Scammers target homeowners on the brink of foreclosure and offer to buy the home as a bailout option. They will then agree to lease it back to the homeowner, who will make monthly payments to them to save the property. The scammers are in full control and can create unreasonable terms for repayment. Some would find the terms unbelievably ludicrous, and homeowners may not be able to afford to get their property back.
YOU CAN STOP FORECLOSURE – AND IT’S EASY!
You have several options to stop foreclosure. However, you need to act as soon as possible and pay some portion of your past due mortgage payments.
- Open Communication with The Lender
Work with your lender on a possible repayment plan or financing options that may be available. The lender can change your loan terms by lowering your interest rate or modifying your mortgage terms.
- Short Sale The Property
List the property for a short sale and find a buyer. Keep in mind that before there is a sale, the mortgage holders must agree to the terms of the sale. Thus, it makes sense to communicate with your mortgage holders and let them know your intentions.
- Know Your Rights
The best prevention of any scam is educating yourself with your rights in case you encounter difficulty in making the payment. You should familiarize yourself with foreclosure laws and timeframes.
- Utilize Your Assets
You can sell other properties, cars, jewelry, bonds, and insurance to obtain cash to pay your mortgage payments. Liquidating your assets is one way to ensure that you do not get behind on payments. This action also presents you in a better light to your lenders and does not destroy your credit rating.
- File for Bankruptcy
Bankruptcy is a last resort option to consider. A bankruptcy can destroy your credit rating and prevent you from purchasing property for several years; however, it will eliminate any collection attempts such as foreclosure. With the foreclosure process on hold, a debtor can work out a repayment or refinancing plan with the court to wipe out your debt.
Read more: DO I QUALIFY FOR A BANKRUPTCY?
Once you have gotten past foreclosure, you will be able to rebuild your credit by paying bills on time, keeping your credit utilization rate at about 30% or lower, apply for a secured credit card, or become an authorized user on a secured credit card.
You need an experienced debt and foreclosure attorney to advise you and act in your best interests. Contact Debt Rescue Law for a FREE consultation at (833) 707-1234.