Home Equity Scams

In the world of real estate, you will find some very dishonest lenders that are willing to take advantage of your desire for cash and in the end scam you out of your equity. Here are some scans to look out for.

Equity stripping is when a lender can get you a home equity loan, even though your monthly income is not enough for the payments. These lenders encourage you to apply anyway, and should you default on payments, they get to foreclose and take your home and strip you of your equity.

Another one is loan scamming. This is when a lender encourages you to refinance your loan. When doing this, the lender charges high fees. The more you flip a loan, the more your debt increases and soon your can become in over your head and most likely loose your house.

Credit insurance packing is another scam. Once a home equity loan has been agreed on, a lender can give you papers to sign that include “charges” for credit insurance that you never asked for. The lender essentially hopes you will no notice and sign anyway. If you do notice, a lender could use scare tactics and tell you that should you not agree to these terms, the loan will have to be re-written and a delay in your application.

Deceptive loan servicing is a scam in which the loan service fails to provide you with an accurate or complete account statements and payoff figures. This makes is pretty much impossible to figure out how much you have paid off or still owe. The service may even tack on late fees or legal fees you don’t understand. This way you are confused, and have more to pay than you should.

Signing over the deed is one more scam. If you are having trouble paying your mortgage, the lender can threaten to foreclose the house. The lender can offer you a new way to finance, and in the meantime really be asking for the deed to your property. Once the lender has the deed, he can treat it as his on property.

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