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Beware of Mortgage Scams: #5 – Relief Scam

by Randy Gridley

Beware of Mortgage Scams: #5 – Relief Scam

Protecting yourself from mortgage scams is important. Becoming an informed homebuyer is the best way to protect yourself.  In this last of a 5-part series in mortgage scams, buyers are cautioned to beware of scams and understand the risks when entering the home buying market.

#5 –Relief Scam;

With so many homebuyers finding themselves in financial straits, the government spent some time constructing legislation to assist homebuyers needing assistance to keep their home.  With these laws and assistance programs comes confusion by the public of what is in effect and available to them.

With confusion comes an opportunity for scammers to take advantage of homeowners and homebuyers who are trying to buy, refinance, or keep their homes.  The “relief scam” entails a person representing themselves to the homeowner as representatives from a company that will help those in need of financial assistance for refinancing their home.  They want to keep their home and relieve the stress of their financial troubles.

The scammer entices the homeowner with a program that, for a small fee, will allow them to not have to deal with the harassing calls of their mortgage company and get them back in good standing. The homeowner pays the scammer a fee to join the “program” and then they are advised of their monthly payment (that they work out with the homeowners as “doable”) and then advice the homeowner to ignore calls and letters from the mortgage company because they are “working” with them.

However, typically, the scammer collects the monthly fees for a short amount of time all the while not paying ANYTHING to the mortgage company. Meanwhile, the foreclosure process has proceeded and the homeowner is oblivious until it is too late. Once the homeowner realizes that there is a problem, the representative they were working with is nowhere to be found.

Read about more scams in our ‘Beware of Mortgage Scams’ series.

Beware of Mortgage Scams: #4 – Loan Flipping

by Randy Gridley

Beware of Mortgage Scams: #4 – Loan Flipping

Home loan scams are as active as the real estate market itself.  In this 5-part series, homebuyers are cautioned on various scams that are prominent in today’s real estate and loan markets.

#4 –Loan Flipping

With mortgage rates at a record low, many homeowners have at least considered refinancing their mortgage. The “Loan Flipping” scam is commonly lead by less than honest lenders who prey upon those with a good amount of equity in their property that might be looking to refinance for various reasons.

Typically, they will look for those that are having financial difficulties or needs such as paying for college or medical debt but that have a substantial amount of equity in their home. They will be enticed by the deal to refinance and have some extra cash to pay off debt or fund college.

Though the rate is typically lower than the mortgage rate they are currently carrying, the fees associated with these types of loans are most certainly higher than a loan through a reputable lender and will eat away at the equity without the homeowner even realizing it.

Read about more scams in our ‘Beware of Mortgage Scams’ series.

Beware of Mortgage Scams: #3 – The Illegal Flip

by Randy Gridley

Beware of Mortgage Scams: #3 – The Illegal Flip

The real estate market today is laden with bank-owned properties and foreclosures.  With this brings the opportunity for mortgage scams.  In this 5-part series, we talk about various scams affecting homebuyers today and what to be aware of to be a knowledgeable homebuyer.

#3 –The Illegal Flip

Flipping a home has been something that has occurred for decades.  The practice is defined as a home, often vacant, foreclosed upon, or boise-meridian-bankowned, that is purchased by an investor at a bargain price, fixed up, and then sold for a profit.  Flipping is actually very legal and a great way for investors to make some money in the real estate industry. It is actually a good practice in the housing market as it improves neighborhoods that might be burdened with vacant and foreclosed-upon properties that become run-down while sitting vacant.

However, this practice has become a front for many real estate scams.  In most cases, the scam is quite involved and has many players.  The investor usually purchases the home for a bargain-basement price after the property has been foreclosed-upon. The investor hires someone to fix up the property for the smallest price possible.  He then hires an appraiser that he usually promises a cut to if they will inflate the appraised value of the home.  Then the unsuspecting homebuyer purchases the home for a price he will likely never be able to resell it for and the investor and appraiser make it away with a large profit (and likely no conscious). In most cases, the closing agent is also involved in the scam and gets a cut of the profits as well.

Read about more scams in our ‘Beware of Mortgage Scams’ series.

Beware of Mortgage Scams: #2 – Mortgage Rescue

by Randy Gridley

Beware of Mortgage Scams: #2 – Mortgage Rescue

Today’s low mortgage rates brings with it mortgage scams for every type of homebuyer. In this 5-part series, we will talk about mortgage scams you need to be aware of as you look to secure a loan for your first home or your new home in this market.

#2 –Mortgage Rescue

With so many homeowners struggling to make ends meet, scammers have found a new way to scam homeowners.  Offering to “rescue” you from your mortgage, these scammers prey on high equity homeowners who are struggling to pay their bills or facing foreclosure.

Presenting themselves as a way for you to stay in your home while you get back on your feet, the scammers offer to pay your mortgage while you pay them “rent.” The promise includes the provision to “buy back” your home once you have caught up your payments over a set amount of time. 

You sign over the deed to the “rescuer” and they are to pay the mortgage company while you pay a smaller rent payment for a set amount of time.  However, in most cases, the scammer pockets the rent and does not pay the mortgage, which is still yours even though the house is not.  The loan to the mortgage company goes unpaid, the house is foreclosed upon anyway, and your credit is still ruined and you are without your equity as well.

Beware of these scammers. They are especially predatory for senior citizens who have built a lot of equity in their home but have been burdened with additional debt from medical bills and family issues.

Read about more scams in our ‘Beware of Mortgage Scams’ series.

Beware of Mortgage Scams: #1 - Reel Them In

by Randy Gridley

Beware of Mortgage Scams: #1 - Reel Them In

With mortgage rates that have not been seen in years comes new and improved mortgage scams. In this 5-part series, we will talk about mortgage scams to beware of as you head out into the sea of lenders in search of a good mortgage rate for your next (or first) home.

#1 – Reel Them In

This mortgage scam is one that has been around, in every service industry, for as long as scams have been around.  In this “Reel Them In” scam, the prospective buyer is reeled in with a promise of an exceptional deal.  It may be a great incentive, a low monthly payment, skipping payments, or even no points.

The prospective buyer gets excited about the rate, gets everything ready for the loan application, jumps through all the hoops put in front of him, and supplies an endless stream of paperwork.  Once everything is FINALLY to the lender, the lender states that the terms have changed or the rates are suddenly unavailable and offers a typically much less desirable deal. This deal, incidentally, will usually work out better for the lender.

In most cases, the prospective buyer will go ahead with the loan because they feel either there are no other options or they have put so much work into submitting the application and its accompanying forms that they don’t want to start over. The lender is hoping for this.

Beware of these types of mortgage scams. Make sure you get deals in writing, understand the terms, know of deadline dates, and go with a recommended lender.  This can help you ensure you are working with a reputable lender and are truly getting the deal.

Read about more scams in our ‘Beware of Mortgage Scams’ series.

Displaying blog entries 1-5 of 5

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Randy & Doyelene Gridley
Silvercreek Realty Group
1099 S Wells St. Suite 200
Meridian ID 83642
Randy's Direct Office: 208-859-7060
Fax: 208-323-8081

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