IF YOU BELIEVE YOU ARE BEING DEFRAUDED, CONTACT YOUR LENDER, OR THE HOUSING AND URBAN DEVELOPMENT OFFICE NEAREST TO YOU.
“Beware of False Promises"
In times of high vulnerability, scam artists love to leave their mark. From "scamdicappers" working online gambling rings to unscrupulous "quack" doctors, it is pretty clear. When homeowners go through foreclosure, they must be aware of the scams out there made by false business people masquerading as lenders and realtors. Their goal is to strike a deal with the homeowner to pay off a troubled mortgage. There are three popular scams currently in operation with these foreclosure predators: equity skimming, straw buying, and signing over deeds.
What is Equity Skimming?
A MESSAGE FROM THE FHA COMMISSIONER:
Recent investigations revealed an "equity skimming" fraud scheme which targets homeowners. Homeowners trying to sell their homes on their own are sometimes in a hurry to sell because they are having financial difficulty. Although the first offer may be perfectly legal and to your satisfaction, be alert to the following examples of how some "buyers" may take advantage of you:
1. A "buyer" approaches homeowners and offers to get them out of trouble by promising to pay their mortgage payments or promising them a large sum of cash when the property is sold. This "buyer" often suggests that the homeowner move out immediately and that they give them the title to the property (meaning the buyer would own the property). This is usually done by using a "quit-claim deed". A "buyer" may also offer to let the homeowner stay in the property or, if they leave, rent it to someone else.
2. The "buyer" collects monthly rent, does not make any mortgage payments, and allows the lending institution to foreclose.
3. The homeowners believe that they will avoid possible foreclosure by signing over the property to the buyer. In addition, they believe that they no longer have to make any further mortgage payments to the mortgage company, when in fact, they still do.
4. In the end, the homeowners have lost everything except any small down payment from the "buyer" and may have lost a good credit rating. By the time the lending institution gets around to evicting the homeowner or tenants, as the case may be, the "buyer" has made a profit at the original homeowners' expense.
Watch-Out for these signs!
The prospective buyer does not look closely at the house; but just takes a quick look around and makes an offer right away.
The prospective buyer does not put up any money, just gives the homeowner a piece of paper, which, in so many words, is an I.O.U.
The buyer offers a relatively small sum of money as a down payment and promises more when the house is resold.
Do’s!
Check any deal involving your home mortgage with a lawyer and/or your mortgage company.
Try to get references and credit information from anyone who offers to bail you out of financial trouble.
Check with the state Company Commission or the local district attorney's consumer fraud unit to see if there are previous complaints filed against the prospective "buyer".
Don't sign any papers unless you understand what they are. Sometimes homeowners have signed away the deed to their homes because the "buyer" told them the papers were something else.
If you sign an agreement, make sure you get all the "promises" in writing. Homeowners with financial difficulties are vulnerable to the so-called "quick fix." But, if you want to save your home, don't be fooled by the equity skimmer. Seek guidance and assistance from reputable and concerned parties.
What is straw buying?
Straw buying is when scam artists recruit a person with top credit to sign off on a document that allows the scammer to use their name and credit information in order to make a fake purchase. These innocent "straw buyers" are actually signing real mortgage applications and false documents with bad information. Here, the fake lender actually assumes the mortgage and title even though the straw buyer is still responsible for making mortgage payments. In this situation, straw buyers are committing fraud by assigning credit to someone else and would be fully responsible under law enforcement and lenders.
Straw-buying is a dangerous scam in Company’s that can cost straw-buyer their credit, home and finances. To understand what straw-buying is you have to think about an identity thief who steals your information and goes on a shopping spree buying homes, cars, jewelry and everything else that the victim will end up paying for years to come.
With straw-buying however, the victims themselves give up their information willingly. Straw-buying is a scam that preys on the natural greed that people have. So when they see the ads from a Company, these people think nothing of dangers and only think about the profit. In effect the money that scammers hold under their noses is the driving force behind straw-buying.
Straw-buying starts with a Company placing an ad in a newspaper. A reader sees the ad and contacts the Company who explains what needs to be done. Once someone agrees to deal with the company they are now taking steps to become a straw-buyer. What a straw-buyer is exactly is someone who lets a Company use their information to buy houses. The straw-buyer is listed as the owner of all the properties and once the homes are bought, the company w ill turn them into rent to own homes. Renters pay the monthly rent to these company's pay the bank. At least that is how it is supposed to work but company who do this straw-buying scam eventually get in over their heads or they just get greedy. Ms. J.
What is the scam know as “Sign Over your deed and
I will save your home“?
If you are having trouble paying your mortgage and the lender has threatened to foreclose and take your home, you may feel desperate. Another "lender" may contact you with an offer to help you find new financing. Before he can help you, he asks you to deed your property to him, claiming that it's a temporary measure to prevent foreclosure. The promised refinancing that would let you save your home never comes through.
Once the lender has the deed to your property, he starts to treat it as his own. He may borrow against it (for his benefit, not yours) or even sell it to someone else. Because you don't own the home any more, you won't get any money when the property is sold. The lender will treat you as a tenant and your mortgage payments as rent. If your "rent" payments are late, you can be evicted from your home.
You can protect yourself against losing your home to inappropriate lending practices.
Here's how:
Don't:
Agree to a home equity loan if you don't have enough income to make the monthly payments.
Sign any document you haven't read or any document that has blank spaces to be filled in after you sign.
Let anyone pressure you into signing any document.
Agree to a loan that includes credit insurance or extra products you don't want.
Let the promise of extra cash or lower monthly payments get in the way of your good judgment about whether the cost you will pay for the loan is really worth it.
Deed your property to anyone. First consult an attorney, a knowledgeable family member, or someone else you trust.
Do:
Ask specifically if credit insurance is required as a condition of the loan. If it isn't, and a charge is included in your loan and you don't want the insurance, ask that the charge be removed from the loan documents. If you want the added security of credit insurance, shop around for the best rates.
Keep careful records of what you've paid, including billing statements and canceled checks. Challenge any charge you think is inaccurate.
Check contractors' references when it is time to have work done in your home. Get more than one estimate.
Read all items carefully. If you need an explanation of any terms or conditions, talk to someone you can trust, such as a knowledgeable family member or an attorney. Consider all the costs of financing before you agree to a loan.
What precautions can I take against Scam Artist?
These precautions can help you avoid being "taken" by a scam artist:
Don't sign any papers you don't fully understand.
Make sure you get all "promises" in writing.
Beware of any sales contract that assumes the loan where you are not formally released from liability (responsibility) for your mortgage debt.
Check with a lawyer or your mortgage company before entering into any deal involving your home.
How can I know if I am being Scamed?
If you're selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. You can contact your state's Attorney General, the State Company Commission, or the local District Attorney's Consumer Fraud Unit for this type of information.