Business & Money

A new wave of foreclosures and housing scams coming

By FinalCall.com News | Last updated: Apr 23, 2012 - 4:44:25 PM

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Mortgage_Fraud_4.jpg
Graphic: Justice.gov
Millions of Americans continue to be at risk of losing their homes to foreclosure due to job loss and income reduction, as well as unsustainable mortgage loans. While many will seek relief from reputable, certified loan modification agencies, too many will become victims of scams.
WASHINGTON (FinalCall.com) - Thought the home foreclosure crisis was winding down?

Think again.

Analysts predict a new wave of foreclosures is looming future as 21 states saw annual increases in foreclosure filings, the most since November 2010, according to RealtyTrac. Half of the top 20 cities also saw annual increases in foreclosures.

“February’s numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed,” RealtyTrac CEO Brandon Moore said in a statement.

That’s bad news to the many homeowners facing foreclosure but the worse news is that fraud scams are also on the rise.

Marian Straughter was in trouble and needed help fast. She was about to lose her home and that was the last thing she wanted. Pride and shame kept her from asking family and friends for help so she answered one of the many letters she started receiving from companies offering help.

“I was desperate and walked right into their trap. I just wanted to save my home and they seemed like a reputable company. I was almost willing to do whatever to save it. It sounded like a good idea but turned out to be the worst decision I’ve ever made,” she told The Final Call.

That worst decision found Ms. Straughter, a single mom in D.C., caught in a foreclosure nightmare that ended with her losing her house.

Millions of Americans continue to be at risk of losing their homes to foreclosure due to job loss and income reduction, as well as unsustainable mortgage loans. While many will seek relief from reputable, certified loan modification agencies, too many will become victims of scams.

“Foreclosure continues to be a problem in America, as do ever-changing foreclosure related scams, which recently have begun to take on the appearance of legitimate federal and state help programs,” said Eileen Fitzgerald, chief executive officer of NeighborWorks America.

Scams prey on the desperation of vulnerable people. Consider the following scams and an explanation from All Foreclosure:

• We’ll save your credit. Pay us a fee and sign the house over to us. The foreclosure will be recorded against us, not you. The foreclosure will be reported against the borrowers on the note and possibly against others on the property title, not anyone else.

• We’ll give you some money, just sign the house over, we’ll cure the default

There really isn’t a problem with it, if you know how much equity you are selling and if the purchaser really will cure the default and if the purchaser will really make the payments and if you want to still be responsible for the loan. Too many ifs to be able to say this is either a good or bad option, just be careful with it. “Every day, hundreds of Americans facing foreclosure fall prey to unscrupulous con artists looking to cash in on distressed homeowners’ desperate need for help, an alarming trend that the Homeownership Preservation Foundation (HPF) has been working diligently to counter through counsel provided via our national Homeowner’s HOPE Hotline at 888-995-HOPE and through joint efforts with the Loan Modification Scam Prevention Network,” said Josh Fuhrman, of the Homeownership Preservation Foundation.

• We’ll buy the property, lease it to you, you have the option to buy it back..

It might happen, but the reality is, to buy the home back you’ll need a new loan that’s larger than the loan you have with an interest rate greater than what you currently have. The payments will be higher and it’s going to be very difficult to qualify.

• We’ll get you a new loan and solve all these difficulties.

Every time you refinance, unless you are paying fees out of pocket, your loan balance is going up which is using up your equity. Lenders can make a lot of money churning loans, you need to consider total loan amounts also, not just the monthly payments. Try to solve the problem, not just extend the time frame.

“Millions of distressed homeowners have become vulnerable targets to criminal third-party scammers, con artists, and thieves,” said Ed Jennings, Jr., Regional Administrator for HUD in Atlanta.

“One should never have to pay for foreclosure counseling or assistance, that’s why we need homeowners to be vigilant by seeking out HUD-approved housing counseling agencies to obtain help and avoid being scammed.”

In 2011, HUD piloted the “Know It. Avoid It. Report It.” campaign in Miami, Chicago and Los Angeles to help inform struggling homeowners about the importance of working with HUD-approved agencies as they fight to keep their homes.

HUD launched the second phase of this campaign March 8 in Atlanta followed by local campaigns in New York, New Jersey, Orlando, Florida and Riverside-San Bernardino, Calif. These are attractive areas for scammers, considering they all continue to struggle with high foreclosure rates.

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