Scams Target People Facing Foreclosure
Oct 6th, 2007 @ 7:01 AM by Alden Smith
With every thing going like it is in the sub-prime market, it was only a matter of time before the con artists and scammers came out of the woodwork to prey on the people who are unfortunate enough to face foreclosure. In these situations, people are desperate, and will usually fall for just about any thing that will get them out from under the burden of foreclosure. Listed here are some of the favorite scams being run today.
Who Is Targeted?
Generally, the con artists go after the elderly or non English speaking population. However, we now see that with all the complexities of the mortgage lending industry, just about anyone is a target.
How the Scam is Run
Many scams are run by telemarketers, who promise that for an upfront fee, they can help the person facing foreclosure bail out. The fee is generally one month’s mortgage payment. Make the payment to them, they disappear. A twist on this is when they talk you into paying the mortgage payment to you instead of the mortgage lender, while they “negotiate” with the lender to stop foreclosure proceedings. Of curse, this is not happening, and you find out about their lack of progress when the auctioneer shows up on your lawn one fine Saturday morning. By this time, the con artist has swiftly disappeared.
It Gets Trickier
Moving up the food chain, the inventive scammer can practice what is called equity stripping. Although this activity is not illegal, it can be used by an unscrupulous con artist to clean a person out of equity in their home. They generally target owners who have less than 50% equity in their home. These lenders pay off the delinquent loan, and then put his mortgage in place at a very high interest rate. The home owner is then confronted with a debt he cannot pay, and once again faces foreclosure. A variation on that theme is for the lender to bail out the home owner with larger and larger loans, along with fees from the lender at a usurious rate. When the equity vanishes, the lender can then foreclose without fear of having to repay the home owner any excess proceeds from the sale.
It Never Ends
These practices will continue as long as there are people out there that are ready to be taken to the cleaners. All that can really be done is to educate the consumer on what to watch out for and what to do if approached by a scam artist. There is hope. There are common sense ways to protect your home and even some legitimate investors out there who can help. You only need to decide who is who.
- Posted in Mortgage Refinancing, Mortgages
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Just read your interesting article on foreclosures and it is certainly a dynamic market right now. For any of the readers, if you are interested to find out what is going on in the California distressed property market, you can get a detailed analysis of foreclose-related properties and of the market trends in the various counties in California. Existing homes for sale inventory rose in 10 out of the 13 California counties we covered. There are more distressed properties in the market in 11 counties out of these 13 counties. Contra Costa County has the highest proportion (25%) of their listed properties related to distressed properties. You can find the report at:
California Real Estate Market Report
Henry
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