RESOURCES
Crime Watch: Senior
Homeowners Beware
Senior homeowners beware of “foreclosure rescue” scams. This
is a nationwide problem projected to worsen. The Better Business
Bureau has received complaints from every state and has issued
an alert to warn consumers to be cautious about foreclosure-rescue
companies.
Regulators and law enforcement in many states are targeting
the two most common forms of foreclosure rescue scams: “Equity
Skimming” and “Bogus Consulting Companies.”
Equity Skimming- A company offers to take legal ownership
of the home temporarily. The homeowner pays rent to the company,
which promises to return legal ownership to them once they
regain their financial footing. However, frequently, con artists
borrow as much as they can on the equity in the home and collect
the rent from the original homeowner but never make any mortgage
payments. In the end, the property still goes into foreclosure
and any equity the homeowner has built is gone.
Bogus Consulting Companies- A company offers to renegotiate
the homeowner’s mortgage with the lender or help refinance
the property. In exchange, they charge an up-front fee, typically
$800 to $1,200.
However, the company never contacts the lender, or knows
the borrower can’t qualify for another loan. What little cash
the consumer could have used to pay the mortgage or move to
an apartment has been wiped out by worthless “services.”
More than 2.2 million Americans are in default on their mortgages.
That figure is expected to grow through next year as 2 million
more homeowners with adjustable-rate loans face higher payments.
This is particularly troubling with regard to seniors on a
fixed income who fall victim to this scam. Their house is
a home, not merely an investment. They’ve raised a family
and created memories. Their emotional ties to their home make
them vulnerable to this scam.
Many victims of foreclosure-rescue scams have already been
cheated by predatory lenders. These predators persuaded their
victims to take out loans with unfavorable terms, knowing
the borrowers probably couldn’t afford the payments they’d
face once their introductory “teaser” rate reset to a much
higher rate.
However, there are hundreds of reputable groups that provide
legitimate services for homeowners in trouble. The Department
of Housing and Urban Development (HUD) has certified 2,300
counseling agencies to help homeowners (www.hud.gov). HUD
and the mortgage industry also support the Homeownership Preservation
Foundation, which operates a 24-7 toll-free counseling hotline
(888-995-HOPE).
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