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How to Spot Corrupt Foreclosure Rescue LoansBy Mindy
BillSavings.com Brief:
The housing crisis is hitting homeowners hard as record foreclosures surface every month. If you’re a homeowner facing possible foreclosure, you need to know about the vicious schemes of corrupt foreclosure rescue loans. Find out how people can scam you into losing your house and get tips on how to spot a scammer and avoid corrupt foreclosure rescue loans.
The number of foreclosures in the United States is expected to jump to more than 2 million over the next few years. Because of this crisis, dozens of foreclosure rescue loans have begun to surface. Some programs are legitimately designed with the honorable intent of helping homeowners facing foreclosure. Other programs, unfortunately, are run by crooked outfits looking to make a buck off unsuspecting people. If you’re facing foreclosure, make sure you know how to distinguish the good programs from the corrupt foreclosure rescue loans. How scammers find homeowners facing foreclosure When a homeowner misses multiple payments on his or her mortgage, the mortgage lender for that person files a “notice of trustee sale” with the courts. This is the first step in the foreclosure process. Such notices become matters of public record. Legitimate companies then comb through these public records for the names of individuals facing foreclosure. Such companies compile lists of those homeowner names and then sell those lists to interested buyers. Most of the time, people who buy lists of homeowners facing foreclosure are from companies that offer genuine, honest services to homeowners in a bind. Unfortunately, there is no guard against who is allowed to purchase the lists of possible foreclosures. As a result, foreclosure scammers easily get a hold of these lists. How corrupt foreclosure rescue loans target long-term homeowners Once a homeowner shows up on a list of foreclosure risks, he or she is deluged by companies and individuals offering mortgage help. It can take roughly three months for a lender to complete a foreclosure. During that time, homeowners have been known to get as many as 20 calls or letters a day from companies offering to help. Even worse is the fact that scammers target homeowners who have been in their homes for many years. Long-term homeowners tend to have more equity built up in their homes. It’s this equity that foreclosure scammers are looking to steal. On top of that, long-term homeowners tend to be older and unsuspecting of foreclosure scams. The foreclosure scamming process Foreclosure rescue loans grab the interest of homeowners with promises to help them out of their financial woes. Corrupt companies then offer complex rescue plans that are confusing to break down and understand. Most of these plans involve either refinancing through a designated investor or arranging a deed transfer with a rent-to-own option. Homeowners are told that such rent-to-own options will allow them to buy their homes back when they are more financially capable. After a terse explanation of the details of their help package, scammers then have homeowners sign a large stack of complex documents. Within these documents is usually a small statement, either in the form of what’s called a “quit claim” or “deed of gift” which effectively signs ownership of the house over to a designated investor. Once ownership of the house is relinquished, the scammers slap the original homeowner with high rental fees. The former homeowner, who was already facing financial strife, generally can’t pay the high rent and so is evicted from the property by the scammer. Why fixing a foreclosure scam is difficult Once you’ve been scammed, it’s hard to prove it. Most states currently have no laws that prevent a homeowner from signing his or her home over to another person. In nearly all cases, the reasons given to homeowners regarding why they should sign their homes over are done verbally. This leaves no paper trail and no way to prove false information was given. In some cases, homeowners who got scammed end up filing civil suits against their foreclosure scammers. While such suits can sometimes resolve the problem, it is a long and difficult process to resolve. Corrupt foreclosure rescue loans are cropping up so frequently that ten states have already enacted laws to protect vulnerable homeowners. Several other states have foreclosure legislation pending. Where to find legitimate foreclosure rescue loans Thanks to the Housing and Economic Recovery Act of 2008, homeowners facing foreclosure now have a legitimate, government-backed way to avoid losing their homes. On top of this, many states are working on their own state-run home loan refinancing programs. These federally-run and state-run foreclosure rescue loans are a safe option if you’re a homeowner facing foreclosure. For any other company offering foreclosure rescue loans, make sure you do your homework before agreeing to anything. Research the company’s history. Find out how many years the company has been in business. Never agree to work with a brand-new company. Look for a BBB (Better Business Bureau rating) or similar credentials. Ask the company for references and recommendations. Carefully read anything you are asked to sign, and if you don’t understand it take the document to a place where free legal advice is given. Put everything the company says it will do in writing and get the signature of a company representative. Trust yourself to make the right decision Finally, trust your gut. When you’re down on your luck and looking for a way out, it’s easy to perk up at the first sign of financial rescue. Force yourself to look past your feelings of hope and to carefully scrutinize the person or company making you an offer. Always seek a second opinion. Never submit to an offer you don’t feel whole-heartedly comfortable with. 11/6/2008
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