Foreclosure Rescue ScamsScam #8 of 12 - The Dirty Dozen - Foreclosure Scam TricksForeclosure Rescue Scam #8) Loan Flipping This is another dishonest practice, but it is represented as a way to get a lot of cash out of your house. It starts out innocently enough with a legitimate refinance on your home where you end up with some cash in your pocket after closing. Your payments may go up a little, but you can handle it. Now you have plenty of cash to straighten out your bills; your new loan is current and in good standing; your problems are behind you. But shortly thereafter, the loan officer contacts you again. You trust him now. You have done business with him and all went well. He offers to refinance you again so you can get more cash out of your home. Who cannot use some cash in hand, right? The terms sound agreeable, and you accept his offer. The foreclosure scammer will refinance you as many times as you will allow. Each time, he is paid hefty origination fees and kick backs that are all rolled into your loan. You may walk out of closing with $2000 in your pocket, but your loan officer has made twice that in the fees - fees that have been loaded onto your mortgage loan. He is getting more money than you are, and you are footing the bill. The next thing you know, you are in hot water because your payments are adjusting to amounts you did not expect and cannot afford. Red Flags: • Your loan officer tells you that you will be able to refinance soon and pull out more equity on your house. • Your loan officer approaches you about refinancing within the first three months after closing • You are encouraged to refinance even though you are not planning to be in your house for much longer. KEEP IN MIND: • IN ORDER TO RECOVER THE CLOSING COSTS ASSOCIATED WITH A REFINANCE, YOU NEED BE PREPARED TO HOLD ONTO YOUR HOUSE FOR ANOTHER EIGHTEEN MONTHS
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