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Foreclosure scams target unwary homeowners

Last week. we detailed how telephone scams can ensnare unwitting debtors into paying off debts for which they are not responsible. This week we will explore the different types of scams related to foreclosures. Scammers prey on those who are experiencing financial difficulties and are desperate for solutions.

Balloon payments

Lenders offer homeowners refinancing terms that include lower monthly payments that are within their budgets. But beware of the small print, as you may only be repaying the interest each month. Then, when the term of the loan expires, a balloon payment is due, which is the entire principal owed in a lump sum. This kind of loan can land homeowners back where they started from, again facing foreclosure.

Equity-skimming

“Buyers” approach homeowners and promise to pay off the mortgage or remit a sum of money after the property goes to sale. These “buyers” can tell you that they need you to vacate the property immediately for the new owners to move in and tell you to deed your property over to them. They then collect rent but don’t pay the mortgage, allowing the lenders to foreclose. It’s important to understand that homeowners aren’t automatically relieved of their loan obligations by deeding their property to someone else.

Signing over the deed

Dishonest “lenders” sometimes offer to help homeowners secure new financing. But they ask that they deed their property over as temporary measures that will forestall foreclosure. But the re-fi opportunities never materialize, and the new owner can encumber or sell it out from under you, evicting you as if you were the tenant, which legally you have become.

Counseling agencies

They offer and provide services for a fee. While you actually may benefit in some ways from their services, such as negotiating new payment plans with lenders, what they offer is nothing that you couldn’t achieve yourself for free,

Before you get ensnared in a scam like the above, talk to an attorney who practices bankruptcy law to review all of your legitimate options.

Source: Findlaw, “Watch Out for Foreclosure Scams,” accessed Oct. 14, 2016

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