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Home Sweet Home: The Sour Deal Scammers Are Offering Desperate Homeowners And How To Protect Yourself.

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By Mia Bolaris-Forget

As far as most of us are concerned the ability to invest in a piece of real estate/buying our own home is often seen as a symbol of success and fulfilling the American Dream. Still, when it comes to real estate, experts assert that (some) professionals look at homebuyers as an opportunity to prove what Barnum and Bailey’s notion that “there’s a sucker born every minute”.

In fact, according to attorneys and other industry professionals, duping unsuspecting prospective home buyers into getting in over their heads, is the newest phase of “get rich quick” schemed out there. And, the note that over 320,000 properties underwent some phase of foreclosure in the first quarter of 2006, citing a 72 percent jump from the previous year. And, some suggest that things can get worse, especially as one third of all mortgages have an adjustable rate and interest is on the rise.

Vulnerable “victims” make easy targets for scammers and under the guise of trying to help often wind up owning the (troubled) homeowners home.

1. “Equity Stripping”: This technique, also known as the bailout, is in particular attractive and ingenious but aimed at not only stripping the homeowner of their equity but of their dignity.

The basic premise of this scam is an individual or company steps in to help a troubles homeowner keep his/her home as a result of a process in which the owner sell the house (to said person or company) at a reduced rate while he/she/they get other financial matters in place. The new owner theoretically takes over the mortgage intermittently while the previous homeowner (the person who hired the person or company) pays “rent” to live in his home, all the while in theory, buying back the home with interest. The appeal is that the setbacks are supposed to be temporary resulting in a win-win situation for all, with the homeowner back on his/her feet and back in the home, and the person/company ahead of the game by earning a profit for “rescuing” the homeowner.

But, legal officials suggest that “reconveyance” offers ample opportunity for abuse, with scammers making promises they have no intention of keeping and never actually anticipating allowing the homeowner to buy back their home. In fact, they make it difficult for them to do so. Finally, based on payments that the “troubled” homeowner is unable to make, he/she/they often go into default and lose their dignity and their home. And, most fail to fight back because they are too devastated and don’t know they can.

The key say experts is to guard yourself. And part of that means know what “to” and “not to” do.

· Be VERY leery of promises such offers to buy you house “as is”, new mortgages offer with lower monthly rates or offers to help save your credit.

· Never sign over your ownership. Beware “quit claim deeds”, especially without consulting a lawyer you can trust. Experts suggest that people who lag on their loan payment can tend to get “desperate” and take any way out, but signing over your home is usually NOT the way to go. You may also want to get the “real deal” on what rights you are giving up and make sure you fully understand them and are okay with them.

· Proceed with EXTREME caution when it comes to sale contracts where you aren’t formally released from you mortgage liability.

2. The Phantom Philanthropist: A fairly simple scam, where you fall behind on payments and a company or person offers to step up or step in to help, charging you thousands of dollars for a multitude of administrative duties like phone calls and filing papers. Despite the claims and your payments, the person is most likely doing nothing to spare you the foreclosure. And, by the time you catch on to what’s really going on, it’s too late and you can’t prevent the loss of your house.

And, if you’re left wondering “why me”, it’s probably because once a lender schedules a home for public auction, the incident becomes public record. Additionally, in a bit more than half the states, a lawsuit is needed (to be filed) in order to encourage a sale. Court records are hence open for review by anyone and everyone, and before you know it the “Good Samarians” come knocking at your door or via your mailbox.

And, in the stated where a sale needn’t be filed (such as California and Massachusetts) foreclosures simply get advertised publicly in the local paper making the vulnerable homeowner even more prone to scams and scam artists.

Again, protecting yourself is a matter of knowing the dos and don’ts.

· Place a call to you mortgage company or lender during difficult times. Request speaking to the loss mitigation department, who despite the bad wrap they get, will actually want to work with you. This, because lenders actually lose money on foreclosures and that’s not what they’re in business for.

· Avoid calling anyone whose number you seen on a billboard or telephone pole advertising help, chances are they are not reputable and can’t be trusted.

· ALWAYS air on the side of caution, especially if

o The party describes itself as a “mortgage consultant”, foreclosure specialist/service” or something in that vain.

o Demands a fee prior to service

o Has clients or targets those whose homes are up for foreclosure, and that includes sending flyers or comes knocking at your door.

o Instructs you to make mortgage payments directly to them or their company rather than to a mortgage lender.

· Stay calm, cook and collected without going into a tailspin. Scammers can detect panic. So, if you sense you may be in trouble get the complete information on the foreclosure process in your state, making sure you are aware of all the deadlines, including those for court, for document filings, etc. Note that states normally have associations that will offer you advice for free.

3. “Replacement Therapy”: Otherwise known as the bait-and-switch, entails scammers talking the homeowner into signing the deed to the house over without his/her knowledge.

The reason this is even possible is that scammers target the vulnerable presenting them with an overwhelming amount of documents requiring their signature, and may even disguise them as being trusts, which many legal professionals have a difficult time deciphering.

And, once you sign, forgery can also go a long way.

· Experts suggest NEVER signing anything that has any blank spaces since information can be altered or added and include things you never knew about or agreed to.

· NEVER get pressured into signing a contract. Take the time to read it thoroughly and fully understand what EXACTLY you are signing. If you have to take it to your attorney and if you don’t have one, find a reputable one FAST.

· DO NOT make verbal agreements. Get everything in wring with plenty of witnesses and copies.

· Go with your gut. If something seems “too good to be true” it probably IS.

Long Island Home & Lifestyle Articles > Home Sweet Home: The Sour Deal Scammers Are Offering Desperate Homeowners And How To Protect Yourself.

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