Scam Alert: Save Yourself From "Rescue" Lenders
By: Sid Kirchheimer
Predatory "rescue" lenders victimize tens of thousands of American homeowners each year. The bait: They promise to help "save" the 1 of every 25 homeowners who face foreclosure of their mortgages in any given year. The hook: Instead of rescuing householders, they leave them high and dry by tricking their way into taking possession of the property.
In addition to those facing foreclosure, says Steve Tripoli of the National Consumer Law Center (NCLC), a consumer advocacy group, other likely victims include those with substantial equity in their homes, notably older people. For them, an offer is made to refinance their homes—to pay for medical expenses, for example—but the scammers then doctor paperwork to seize ownership of the property under the guise of providing a loan.
How do the scammers learn of impending foreclosures? You can thank an obliging lending industry, which broadcasts the bad news of impending foreclosures in newspapers and professional journals as part of its duty to update the public record. Once a so-called rescue lender gets a whiff of ruination in the wind, he mails to the victim's home an offer to "save your house" or "pay off your loans." Next, the rogue takes one or more of these destructive steps instead:
Tricks homeowners into unknowingly signing "sale" documents by rushing the owner through the loan closing, or by burying crucial documents in a mountain of paperwork.
Falsifies signed documents, or forges documents and keeps their existence a secret from the homeowner.
Buys the home for a fraction of its value from the desperate owner, who may knowingly surrender title—sometimes in exchange for a "rent-to-own" or other buy-back arrangement during a time of financial need.
Strings along the time-pressed victim, levying outrageous "processing" fees for a loan that is never delivered.
If you are facing foreclosure, first ask your mortgage lender to grant you more flexible payment terms; many will. If you have no option but to refinance your mortgage or take out another loan on your home, contact your state attorney general, state housing department, or state banking commission. Any of these agencies can help you distinguish legitimate lenders from unscrupulous "rescuers," says Julie Ralston Aoki of the Minnesota Attorney General's Office. Housing agencies, including the local offices of Habitat for Humanity and ACORN (the Association of Community Organizations for Reform Now; www.acorn.org), also offer counseling on preventing foreclosure. So do local Legal Aid offices, which should be listed in your Yellow Pages.
From "Scam-Proof Your Life: 377 Smart Ways to Protect You & Your Family," by Sid Kirchheimer, 2006, p. 65.
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