Foreclosure is a fear of many homeowners. When the process is started by the bank or lender, that information becomes public, meaning that anyone can learn of your financial difficulties and prey on your unfortunate situation. There are many foreclosure-related companies and while some of these are legitimate, many of them are not. You can check with the U.S. Department of Housing and Urban Development to determine the validity of someone who’s contacted you. However, it’s also important to familiarize yourself with some of the most common foreclosure scams so you can protect yourself from them.
In this scam, a person approaches your door and tells you that they’re interested in buying your home. They will usually offer less than market value, but assure you that they are going to pay off your mortgage. All you have to do is transfer the deed for the property to the purchaser, move out of the home, and the buyer will likely advise that you stop communication with your lender.
Once you’re out of your home, the buyer will start renting the property out to a third party, collecting monthly rent payments. However, they will not pay off the mortgage as they promised. Eventually, the lender will foreclose on the property. The buyer may then even flip the property, making a profit off of whatever equity you have in your home.
You should never sign a deed over to a third party. Always speak to your lender if ownership changes and don’t make anything official until you’ve done that, and have spoken to an attorney as well.
Equity stripping is different than equity skimming because it involves unscrupulous lenders. This scam involves a lender that is aware of your financial position and seeks you out, telling you that they can offer you a home loan. When filling out your application, they will likely encourage you to inflate your income slightly, so your chances of being approved for the loan are better. You accept the conditions because you are experiencing financial hardship, even though you’re not sure if you can afford the monthly payments. As soon as you default on those monthly payments, the lender begins foreclosure proceedings, essentially stripping you of any equity you’ve worked hard to accumulate.
Illegitimate Counseling Agencies
As soon as news of your foreclosure becomes public, you may find yourself being inundated with numerous phone calls. Unfortunately, not all of these agencies are legitimate. All they do is make some phone calls, and they may even try to renegotiate your loan with your lender. Nothing these agencies do is very difficult, nor is it costly. Also, these agencies don’t have the experience necessary to successfully negotiate with your lender or to help you avoid foreclosure at all. They do, however, charge exorbitant fees that are quite outrageous and that you likely can’t afford. Always check the legitimacy of these agencies and never pay upfront for their services. When negotiating with your lender, it’s always best to speak to an attorney who does have the experience needed to get you the desired result.
Mortgage Lender Scams
Lenders have other ways of scamming you rather than just stripping you of your equity. Sometimes, dishonest lenders may offer to refinance your mortgage loan so you can afford it. When you start paying the refinanced loan, you’ll be extremely pleased with how loan the payments are. As you near the end of the loan’s life, you’ll realize that you have a massive lump sum payment due. If you are unable to make the loan payment, you’ll likely lose the home, even though you’ve been working diligently to repay your mortgage.
Invalid Loan Transactions
In this scam, a lender may present you with a loan document that claims to bring your loan payments to date. Unfortunately, many borrowers don’t realize that this document also transfers the title of the home to the lender for a tiny percentage of its value. Other terms of the loan will include prepayment penalties, balloon or interest-only payments, outrageous fees, and rate adjustments that kick in immediately. To avoid falling for this scam, the best advice is to simply let your attorney review all documents before you sign them.
You may think that refinancing your home loan will make it more affordable to you. In many cases, that is true. However, when unscrupulous lenders offer to refinance your home, they may also offer you additional cash. This is tempting, so you accept the offer. Shortly after, the lender again offers to refinance your loan and give you even more cash, this time perhaps for home renovations. Again, the offer is very tempting, and you once again accept the offer.
While this arrangement may sound great at first, it’s important to understand that the cash the lender is giving you is likely not enough to cover the additional fees and costs the lender is charging you to refinance your loan. The lender likely won’t even tell you about these high fees, leaving you to only find out when it’s too late. This regular refinancing may only place you further into debt and you’ll soon learn that you can’t afford to pay off your mortgage because of those high costs and fees. When you can’t make those payments, the lender then starts the foreclosure process, and you lose the equity you’ve worked hard to build up in your home.
Our Florida Foreclosure Defense Attorneys Can Protect You from These Scams
If you’re facing foreclosure, or are having trouble making your mortgage payments, call our Fort Lauderdale foreclosure defense attorneys at Loan Lawyers. We can negotiate with your lender on your behalf, and protect you from any scams other lenders and agencies may try to lure you into. Call us today at (954) 523-HELP (4357) to schedule a free consultation with one of our attorneys. After reviewing your case, we’ll advise on how we can help protect you and your home.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.