Foreclosure Rescue ScamsScam #6 of 12 - The Dirty Dozen - Foreclosure Scam TricksForeclosure Rescue Scam #6) Equity Skimming Equity, in simplest terms, is the dollar amount of ownership you have in your home. If you know the recent purchase prices of nearby homes like yours, you can get a good estimate of your equity. For example, if a neighbor with a similar home sold his house recently (within the last six months) for $250,000, then you can safely assume that you’re your home's value is about that much, too. But that is "value", not "equity". Equity (dollar amount of ownership) is the home's value minus the amount you owe on it. For example, if you know your home is worth about $250,000 but you still owe the bank $190,000, you have $60,000 equity in your property ($250,000 - $190,000 = $60,000). That is something to be proud of. It is not uncommon for people who have owned their home for a while to have tens, even hundreds of thousands of equity. So it shouldn’t' surprise you that there are a slew of con artists out there that would love to steal it. People commonly targeted for equity skimming are elderly homeowners and homeowners with sub-prime or adjustable rate mortgages who are facing foreclosure. As in the lease-back scam discussed earlier, the foreclosure rescue scammer may say that it is necessary for you to temporarily sign over your deed to him, to another person, to a trust, or to a title company. They may use the term "straw buyer" or say the person buying your home is an investor. They promise that your home is being "sheltered" under someone else's name and good credit. This plan appears to buy you some valuable time. But once they take ownership, they secretly arrange a second mortgage using your equity as collateral. You are not even aware that the second mortgage has been created. They will borrow as much as the lender will allow, pocket the money and skip town with your equity. Meanwhile, payments on that second mortgage payment come due, the foreclosure rescue scammer has disappeared, and you have lost the equity in your house. Sometimes the foreclosure scam con artist will actually stick to part of the plan by paying off your debts. But he may have lied to you about how much equity you actually have in your house. He prints out false paperwork that says you have $20,000 equity, when the bank says you actually have $40,000. He borrows the $40,000, uses $20,000 to pay off your bills, and pockets the other $20,000. You may never even know that your second mortgage payment is on a $40,000 loan because the scammer showed you false paperwork that said your second mortgage was for $20,000. The foreclosure scammer may tell you that by transferring ownership (or signing your deed over), you are no longer obligated for the mortgage or any back payments. That is usually not the case. There is a "due on sale" clause in most mortgages that requires you to satisfy all obligations of the mortgage before anyone else can take over the responsibility. It is your job to contact your lender directly and make sure that you are no longer tied to the loan in any way—even after the transaction has closed. Never take another person's word for it. Red Flags to look for: • Any plan where you sign or transfer your ownership or your deed. • Anyone (other than your lender) who tells you that you are no longer financially responsible for your mortgage. • Terms like "straw buyer", "third party", "sheltering", or "protecting" your deed in a "trust" or "title company" • Anyone other than your lender who tells you the amount of equity you have in your home. Things to keep in mind: • NEVER TAKE ANOTHER PERSON'S WORD THAT YOU ARE NO LONGER OBLIGATED FOR YOUR HOUSE PAYMENTS. CALL THE LENDER AND FIND OUT FOR YOURSELF. • SCAMMERS ARE SKILLED AT CREATING FALSE DOCUMENTS – THEIR PAPERS LOOK LIKE THE REAL THING • DOUBLE-CHECK - EVEN TRIPLE CHECK - WITH YOUR LENDER ABOUT HOW MUCH EQUITY YOU HAVE IN YOUR HOME – never take one person's word for it.
|
