General Warns Homeowners of "Equity Stripping" Scams
By Greg Abbott
Attorney General of Texas
Home ownership lies at the heart of the American dream.
Unfortunately, a sudden job loss, family illness or other financial
hardship can threaten that dream. Faced with rising mortgage
payments or foreclosure, distressed homeowners may be tempted by
financial predators who promise to "save" their homes.
Missing just one mortgage payment can bring a homeowner to the
brink of foreclosure. Late fees and penalties accumulate. Mortgage
credit ratings suffer, and debt spins out-of-control.
Equity-stripping scam artists prey on struggling homeowners. When
properties with late tax payments appear on a public list at the
county clerk's office, these unscrupulous schemers monitor them
closely, contacting homeowners by phone, mail or with door-to-door
solicitations. They know that a homeowner who misses a tax payment
may have fallen behind on mortgage payments as well. Another scheme
tempts homeowners with advertisements offering "mortgage rescue"
Equity-stripping scams take various forms and often include
promises of upfront cash, repaired credit and assurances that
homeowners will be able to keep their homes in the long run. In some
cases, a "foreclosure specialist" may claim to arrange for an
outside buyer to "temporarily" purchase a home. In return, the owner
receives a percentage of the profit in cash while the temporary
buyer makes the mortgage
payments . Good credit will be restored, the
owner will qualify for refinancing and the home will be saved!
Unfortunately, this is rarely the result. Homeowners may receive
the upfront cash, but the assurances that debts, including
outstanding mortgage payments or tax liens, have been paid are
false. In reality, the scam artists have refinanced the house, taken
the equity in cash and stopped making mortgage payments, forcing the
home back into foreclosure.
In another twist, "foreclosure experts" may promise that
homeowners who sign over their property deeds and continue making
monthly payments can continue living in their homes. The scammer
typically promises to invest the equity and earn enough from those
investments to pay off the mortgage. Within a short timeframe, the
"specialists" promise, the homeowners will get back their
properties, free of any mortgages. Once again, the homeowners
usually end up in foreclosure after the company borrows large
amounts against the home and strips it of its equity.
In most cases where homeowners lose their homes, the problems
began with a single missed mortgage payment. Homeowners facing
financial difficulties that could result in mortgage default or
foreclosure should consider contacting a credit counseling agency or
the U.S. Department of Housing and Urban Development (HUD).
Homeowners should never deliberately withhold a mortgage payment.
If you are involved in a dispute with a mortgage company or a
"mortgage-saving" company, file a complaint with the Office of the
Attorney General, the Federal Trade Commission and HUD. Do not
default on your loan.
Cash offers to "save"
a home may be tempting, but remember that there are few quick fixes
to financial hardships. With proper
debt management and patience,
you can save yourself and your home from financial predators.
If you are a victim of a foreclosure rescue or equity stripping
Click here for legal help and a free evaluation of your possible case
To learn how to save your
home from foreclosure, please see:
Ways to Save Your Home
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