Foreclosure Rescue Scams

Scam #7 of 12 - The Dirty Dozen - Foreclosure Scam Tricks

Foreclosure Rescue Scam #7) Stripping Equity

This scam is usually perpetrated on nervous, unconfident, stressed out homeowners who may not even be facing foreclosure, but are scared to death that it won’t be long until they receive a foreclosure notice from the bank. Typically, these victims don’t have a basic knowledge of mortgages or the foreclosure process. They may not speak English. These homeowners also do not work well with numbers and are intimidated at the thought of trying to understand how mortgages work.

The more equity you have, the more tempting this scam can be. It is set up in the same way as equity skimming which we just discussed. Namely, you are promised a new loan that will cover all past due amounts: house, car, credit cards, medical bills, and most importantly will remove the looming threat of foreclosure. In short, you are promised a fresh start.

Many times the foreclosure scammer will encourage you to exaggerate your income on the loan application. If you offer resistance, they may compliment you for your honesty, but reassure you that this is a common practice and that it will get you approved quicker. This practice is known as "padding." Your instincts were right. It is not only dishonest. It is illegal.

They are purposely setting you up for a loan that you cannot afford. It may start out affordable, like the loans we talked about in the Refinance Scam (#2). They actually want you to default on the loan so they can take your house and re-sell it.

In the meantime, they have taken you for loan fees, commissions, and inflated closing costs. They have made plenty of money just on creating the loan. Now they want your equity and your house, too. Their goal from the beginning was not only to rip you off for exorbitant fees, but to take your house and your equity in the process.

Red flags to look for:

• If you are encouraged to falsify your financial information

• If you are promised low payments and low rates – IT REALLY IS TOO GOOD TO BE TRUE

KEEP IN MIND:

• IT IS A FEDERAL OFFENSE TO MAKE FALSE STATEMENTS ON A LOAN APPLICATION
Return to Dirty Dozen

Return to Main Menu - Foreclosure Rescue Scams