Spotting Mortgage Scams

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Spotting Mortgage Scams Powered By Docstoc
					Presented by Daniel Toriola
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Spotting Mortgage Scams By Paula Cherrist

With the recent real estate market downturn and condo bust affecting most states across the U.S., more and more homeowners are turning to refinancing to save their homes. First time buyers who are also experiencing the so-called credit crunch are also broadening their search for loan and mortgage companies. This new group of sometimes inexperienced and desperate customers has given fraudulent mortgage companies and scam artists plenty of fresh targets and prompted even more creative ways for them to part you from your money instead of offering financial aid. But there are certain tell-tale signs that should put you on the alert for fraud and potentially save you and your home from foreclosure and bankruptcy. According to the Financial Crimes Enforcement Network, reports and complaints of mortgage fraud have increased dramatically over the past two years. From the 15,000 they received in the first three months of 2008, they estimate they will have more than 60,000 before the year is over. The most common scams for homeowners desperate to save their homes from foreclosure are variations on refinancing schemes. Say a homeowner has missed a payment on their original loan or is barely able to make the monthly payment anymore. Suddenly you are approached by someone claiming to be a representative of a loan company who is willing to refinance your home and reduce your monthly payments. This sounds like a complete blessing, but in fact it's a curse of sorts. The fine print on the contract confirms that your lower payments are only covering the interest and in a few months the balance will come due in a balloon payment that you cannot possibly afford. Once that happens, your home will be facing foreclosure immediately. Another refinancing scam is where a lender comes along and offers to either personally guarantee a new loan or negotiate with your existing mortgage company for you. All you have to do it sign over your home temporarily to them and make payments directly to them. They will handle the rest for you. But what they are actually handling is your money and either not making payments for you or selling your home outright to another party. In both cases you will eventually discover that you no longer own your home, which shouldn't be surprising since you signed the title away, and receive an eviction notice by the new owner or a notice of foreclosure by your mortgage company because they haven't received your payments. Reconveyance is when an individual or bogus company offers to purchase your home for you and
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allow you to make low monthly payments as a buy-back agreement. But by signing your home over, you once again leave yourself open to eviction and foreclosure as soon as you miss a payment. Most pre-construction and new construction condos are initially marketed with lower prices or an incentive package. When you buy a unit from a reputable developer and do a little checking on previous projects they have completed, you can be reasonably certain it's a safe investment. Most high profile luxury condos in Chicago like the ones listed here are a safe buy. But some developers and even real estate agents will get creative to sell units in a building that they want to sell out or need a certain amount of pre-sales to secure a construction loan. In those cases they may offer what seems to be unusually large discounts, thousands of dollars in free upgrades or even tax, loan or assessment breaks. To pay for these perks they often inflate the price of the condo and you end up paying more than the unit is actually worth even though you thought you were getting a great deal on extras. Scammers will also try to attract would-be or novice investors into a high pressure sales seminar with the plan of pooling money and purchasing short sale condos or foreclosure properties and then reselling at a profit. Often times the organizers of these investment groups pocket the money and are never seen again or buy such substandard homes that a huge sum would need to be spent in renovations before the property could be sold at all, much less at a profit. Even if you own your home free and clear you could be targeted. You might be approached by a lender tempting you to take out a mortgage you don't need just to have extra cash to spend. Or you might have a contractor show up who was just in the neighborhood and offer to do what they describe as much needed home repairs and can arrange financing for you. If you agree to this and sign paperwork, you may find yourself in debt for a large sum of money and be held hostage by a contractor who has perhaps ripped off part of your roof and won't finish until you pay. You should also be wary of any lender who offers immediate credit in exchange for your sensitive information such as Social Security number, bank account numbers or anything else. Also never sign any type of contract you haven't read, had an attorney read, or that has blank spaces that can be filled in later. Always demand a copy of all paperwork no matter how insignificant it may seem at the time. The best rule of thumb for any type of refinancing or mortgage offer is the same as every other offer in life; if it looks too good to be true, it probably is. Paula Cherrist writes real estate related articles for Best Chicago Condos

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Foreclosure Info - Tips For Avoiding Foreclosure Scams By Barbara Pena

As foreclosures are on the rise, so are the scams that commit to “rescuing” the homeowner from losing their home to foreclosure. These scams just steal your hard earned money, destroy your credit record and eliminate any equity you might have in your home. These foreclosure con artists use people who are dire financial straits. They know these people are desperate and are grasping at straws for answers to their foreclosure situation. People to target for these scams are not hard to seek out as mortgage lenders publish notices before foreclosing on homes. These con artists read these notices then contact their victims quite often even in person but more commonly by mail, phone or by email. They even go so far as to advertise their services on web sites. They make themselves sound official by giving them impressive titles like “foreclosure consultant” or “mortgage consultant.” They may call their services “foreclosure service or “foreclosure rescue agency.” If you are facing foreclosure, contact your mortgage lender or any legitimate financial counselor to help you find legitimate options to avoid foreclosure. It is imperative that you carefully check the credentials, reputation and experience of anyone offering to arrange to stop or delay your foreclosure for a fee. The following recommendations can help protect you: WATCH OUT FOR THESE FORECLOSURE RESCUE SCAMS Lease-Back or Repurchase Scams – Someone offers to pay off your mortgage and rent you residence back to you. This usually involved signing over the deed of your home to the individual. This will give the person the ability to evict you, raise the rent, sell the house or steal your equity. You are still responsible for the mortgage so if the individual doesn’t make the payment, your house still gets foreclosed on and you face the legal consequences. Refinance Fraud – Someone acts as a mortgage broker or lender and offers to refinance your loan to a lower payment. They make you believe you are signing the documents for a new loan when in actuality you are signing over the ownership of your home. This opens you up to the situation as above. Bankruptcy Schemes – Several scams try to abuse the bankruptcy laws. These are complicated schemes, so it is important to always thoroughly investigate anyone offering to help you with your bankruptcy. Anytime someone wants you to sign over ownership of your home, be very cautious. HOW TO PROTECT YOURSELF FROM SCAMS Always know what you are signing – It is important that you thoroughly read and understand what you are signing. Obtain advice if a document is too complex. Do not sign anything with blank spaces, errors or incorrect information even if someone promises to fix things later. Get everything in writing - Verbal agreements are usually not legally binding. It is important that you get any promises or agreements in writing to protect yourself. Be sure to keep copies of anything you sign.

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Make your mortgage payments directly to your lender or the mortgage servicer - Do not trust anyone else to make mortgage payments for you. Be cautious about signing over your deed – Scams quite often require you to sign over your deed. Always get the advice of a lawyer or financial advisor before doing so. You do not want to lose your rights to your residence and any equity that you may have. Report any suspicious activity to the Federal Trade Commission and to your state and local consumer protection agencies – This helps to prevent others from becoming victims. HOW DO I FIND LEGITIMATE HELP FOR YOUR FINANCIAL PROBLEMS Contact your lender as soon as you think you are unable to make your mortgage payment. Contact a legitimate housing or financial counselor to help you work through your financial problems. For more information about foreclosure and how to potentially stop loan foreclosure, visit

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Related eBooks: Foreclosure Info - Tips For Avoiding Foreclosure Scams Mortgage - How to Avoid Mortgage Scams if You Are Heading Into Foreclosure How to Get Home Loan Modifications - Proven Methods and Workarounds How To Identify Internet Marketing Scams So You Can Avoid Them? Afraid Of Costly Home Loan Loan Refinance And Scams? Get more Free PDF eBooks at Related Products: Scams Exposed How to Buy a Car Without Getting Ripped Off! Money Saving ideas Newbie’s Guide to Stop Spam BEFORE You Borrow Money A genuine resource center for Quality Ebooks and Softwares
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