Mortgage Rescue Scams Are On The Rise

Mortgage Rescue Scams Are on​ the​ Rise
One type of​ mortgage rescue scam involves a​ predatory real estate investor stealing the​ equity a​ victim has built up in​ their home. Typically,​ the​ scammer will tell the​ victim they want to​ help save the​ home from foreclosure. This real estate investor will tell the​ victim he or​ she will buy the​ house personally,​ or​ will arrange to​ have another investor purchase the​ house.
The scammer promises to​ lease the​ house back to​ the​ victim for a​ period of​ 12 to​ 24 months to​ allow the​ victim to​ recover financially,​ repair their credit,​ find a​ better job,​ etc. They say that after the​ victim is​ economically healthy they will sell the​ house back at​ the​ end of​ the​ lease.
The real estate investor will often also attempt to​ sell credit repair services,​ mortgage broker services,​ and job placement services to​ the​ victim as​ part of​ the​ scam. Eventually,​ the​ scammer will force the​ victim out of​ their home and then sell the​ house,​ keeping the​ equity for themselves.
Government officials are seeing more of​ this type of​ criminal scam as​ mortgage rates increase and increasing numbers of​ homeowners are facing higher mortgage payments.
The scammers often use company names reflective of​ church affiliations. Often they use connections through social organizations or​ churches to​ meet victims.
Another type of​ mortgage rescue scam is​ a​ lease back transaction built on​ a​ series of​ lies. the​ scammer has no intention that the​ victim will be able to​ avoid losing the​ home. the​ scammer leases the​ house back to​ the​ victim with lease payments as​ high,​ or​ higher than the​ mortgage payments the​ victim was failing to​ make in​ the​ first place.
The scammer will often fail to​ provide the​ promised credit repair services,​ mortgage broker services,​ or​ job placement services that would be needed to​ put the​ victim in​ a​ position to​ repurchase the​ property at​ the​ end of​ the​ lease. as​ soon as​ a​ lease payment is​ missed the​ scammer will move to​ have the​ homeowner evicted.
Once the​ homeowner is​ evicted,​ the​ scammer will sell the​ house,​ pay off the​ underlying mortgage,​ and keep the​ equity. the​ victim end up with ruined credit and any mortgage obligations not satisfied by the​ sale of​ the​ home in​ the​ scam transaction.
There are many other variations on​ this scam. Sometimes the​ scammer will purchase the​ house from the​ victim below market price. the​ loan application may claim that the​ scammer intends to​ occupy the​ house when,​ in​ fact,​ there is​ already an agreement to​ lease the​ house back to​ the​ seller which is​ not disclosed to​ the​ lender. This lie helps insure that the​ loan will be approved and will give the​ scammer a​ better interest rate on​ the​ mortgage than if​ it​ had been an investment loan.
Sometimes the​ scammer will use an investor to​ purchase the​ house with a​ mortgage loan at​ below market value. the​ investor,​ who is​ often another victim,​ will then immediately quit claim the​ house to​ the​ scammer,​ often for a​ fee being paid by the​ scammer. the​ investor’s loan application will often claim the​ property is​ to​ be owner occupied when there is​ a​ lease agreement already in​ place with the​ seller. the​ existence of​ the​ lease will not be disclosed to​ the​ lender.
Scammers find vulnerable people through marketing,​ public records,​ or​ personal networks. Marketing includes direct mailings,​ radio and TV ads,​ or​ simpler approaches such as​ posting fliers. Public records may be found at​ county recorders offices where notices of​ trustee sales are available to​ the​ public.
Personal networks often include churches or​ community organizations. Professional networks can be used to​ locate victims when the​ scammer is​ also a​ real estate agent,​ mortgage broker,​ loan officer,​ attorney,​ or​ appraiser with inside information about the​ victim’s vulnerable financial position and pending foreclosure.
If you​ know people involved in​ these types of​ scams,​ call the​ Department of​ Financial Institutions Enforcement Unit with details.

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