Many Lenders Have Programs To Assist Homeowners In Financial Distress

If at any time the adage of" Let the buyer beware" were applicable, it would certainly be when a homeowner is experiencing foreclosure.

A homeowner should be very wary of such too- good- to- be- true offers and keep in mind that each foreclosure situation is unique to the individual homeowner. Distressed homeowners undergoing foreclosure are often approached by less than ethical business people( lenders, financial advisor and/ or realtors) that are more interested in their own financial gain than" helping" the homeowner to get out of foreclosure. While some homeowner's may be seriously in debt, others may have, unemployed and overextended enough equity and credit to be able to sell their home or restructure their loan. Equity Stripping or Skimming. The first rule of thumb a homeowner should determine to do is to explore ALL their options, this would help them avoid or be tempted by some of the following foreclosure scams. In this type of scam, a" buyer" approaches the homeowner, offering to assist the homeowner out of financial trouble by promising to pay off their mortgage or give them a sum of money when the property is sold.

The" buyer" then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. The" buyer" may suggest that the homeowner should move out quickly and deed the property to him or her. Remember, signing over your deed to someone else does not necessarily relieve you of your obligation on your loan. If the home has a lot of equity in it the" skimmer" will sell the home, pay off back debts on the home, and keep the equity the homeowner could have had if they had sold their home themselves. A homeowner may find himself saddled with the loan he thought he had signed off on and therefore, in a worse financial situation then the previous one he or she was experiencing. Straw Buyer. A straw buyer may or may not know that their name will be on the mortgage application.

A straw buyer( usually a person with good to excellent credit) is usually offered a payment, often several thousand dollars, for the use of their name and credit information to make a" false purchase" . Straw buyers are also used to sign documents that contain false information. If any document is signed that states the property is worth a specific amount, but the straw buyer has never seen the property, they are committing fraud. For example a straw buyer might sign something that states that the purchaser intends to live in the property when they really have no intention of doing so. If the lender asks if the down payment came from the straw buyer's own funds and he/ she answers dishonestly, this too would be fraud. However, a straw buyer may still be responsible for a mortgage even after someone else has assumed it because it was obtained fraudulently. After a straw buyer takes title to the property, the originator of the scheme, be it a realtor or loan officer behind the scheme usually assumes the mortgage and the title to the property.

It is a criminal offence to obtain credit under false pretences. The straw buyer could be sued for the difference between the amount of money received from the sale of the property and the amount of money owed on the mortgage. If payments are not made on the mortgage, the lender will foreclose on the property to recover their losses. Signing Over Their Deed. Often, the money never comes, and the scam artist sells the property to someone else. A distressed homeowner having trouble keeping up with the mortgage is pursued by another lender, who tells him it's necessary to deed the house over to him in exchange for new financing. Don' t ever sign your deed away!

Some groups calling themselves" counseling agencies" may approach the homeowner and offer to perform certain services for a fee. In addition, a homeowner should beware of solicitations either by mail or phone from counseling agencies that charge exorbitant fees to" assist" them. These could very well be services the homeowner could do for themselves for free, such as negotiating a new payment plan with the lender, or pursuing a legitimate pre- foreclosure sale. Some general tips a homeowner should keep in mind is to call or write their mortgage lender immediately and be honest about their financial situation. Review the legitimacy of these businesses with the Better Business Bureau or other federal agencies. Many lenders have programs to assist homeowners in financial distress. Most importantly, a homeowner should explore ALL their alternatives before taking any action.

Also, the homeowner should make sure that they stay in their home to make sure that they qualify for such assistance.