Perhaps one of the most insidious manners in which humans prey upon one another is when one individual is hurt, stunned or injured. Most home owners are decent folk. They bought a home with a mortgage fully intending to make every payment. But then life happened.
For whatever reason, and there are many, first one payment was missed and then a second. Now 60 days late on mortgage payments the strain and embarrassment are almost too much to bear. Any family finding themselves in this position is vulnerable to a very real type of home equity fraud.
At every home closing there are what seems to be an endless stack of papers and countless places for you to sign. After the first few sheets the massive amount of information contained in these documents serves as an effective novocane for the brain. In short there are very few borrowers who are capable of retaining more information than the monthly payment amount and a ballpark estimate of their interest rate.
This mind numbing experience is overwhelming for most borrowers, so much so that they resign themselves to never truly understanding it all. And herein lays the danger.
When the borrower finds themselves more than 30 days in arrears on their mortgage payment, the lender places a negative mark on the borrower’s credit. They do because one of the papers every borrower signs at closing is the agreement that should they make late mortgage payments the lender will report this to the credit repositories.
When the borrower becomes 60 days late, because this late payment involves real estate, the event falls into the category of public information and is filed in the county where the property is owned. Anyone can research this information and for a small fee obtain an official report of properties at risk of foreclosure.
Unscrupulous people take this report and, under the guise of helping the home owner “get back on their feet” actually commit a series of acts placing the home owner in a worse situation than where they currently find themselves. The con goes something like this.
The con contacts the home owner who is seriously in arrears with their lender and promises to put their experience and knowledge to work for them helping them “catch back up” on back payments and keep their home. The home owner is already fearful of losing their home and any equity they have built, so they welcome this redeemer into their home.
This knight in shining armor produces a stack of papers that at first glance promise to help the home owner keep their home without having to file bankruptcy and without further damage to their credit report. Instead of protecting themselves and their home they have in fact signed the ownership of their home over to the con.
The con is experienced in what he does next. Once he is legally placed on title of the home, he can and does take out a second mortgage removing as much of the homes equity as possible.
Not only does he not make good on any of his promises to help the home owner “catch up” on back mortgage payments, he also robs them of any equity they had in their home. This leaves the home owner in far worse condition than before. He walks away from the entire situation thousands of dollars richer than he was before.
There are legitimate agencies that can help anyone who finds themselves in arrears with their lender. One such group is the Homeownership Preservation Foundation. Here home owners can find guidance and counseling to help them avoid foreclosure. Contact them at 1-888-955-HOPE. This service is available 24 hours a day and provides counseling in multiple languages.
An additional resource defining key mortgage terms can prove helpful to anyone going through this painful process. Knowledge and understanding are even more critical when vulnerability is at it greatest. This resource can be found at: http://www.fanniemae.com/aboutfm/pdf/key_mortgage_terms_eng.pdf.