Don’t Let Mortgage Foreclosure Scams Rip You Off!

29 Jan Don’t Let Mortgage Foreclosure Scams Rip You Off!

You’re behind on your mortgage payments. A foreclosure has been filed against you. What do you do? Unfortunately, there are many scam artists who prey upon people who are in a desperate situation and are unaware of their rights. Some of the more common scams we see are:

Equity Skimmers.“Facing foreclosure? How does this sound: we’ll give you $5,000, stop the foreclosure, and let you live in the house rent free for the next year. Just sign here.” What you’re signing is a deed to your home. Even if the person calling him or herself an “investor” really cures the default and really lets you stay in the house for a year (not necessarily a given), what are they really buying? Your equity. If you have $100,000 in equity in your house, and rent is $1,000 a month, you’ve just given the equity skimmer a profit of $83,000 in one year’s time. Far better is to sell the house on the open market or file for Chapter 13 relief so that you can keep the equity you’ve built up in your home.

In some cases, you’ll be told that you can lease the property back, and they will resell it to you in six months or a year. The problem, of course, is that in the vast majority of cases, you can’t qualify for a new loan to buy the property back, and end up losing the house. And even if you can, you’ll need a new loan that’s larger than the loan you have with an interest rate greater than what you have with higher payments.

Some states, such as Maryland, have passed laws that prohibit or severely restrict equity skimmers.

Foreclosure Timing Artists. Most people believe that if their house is foreclosed on they have to be out the next day (or they can be immediately evicted). In most states, that is not true. Months or even years may pass before a foreclosure purchaser actually takes steps to remove you from the house. Foreclosure Timing Artists take advantage of this lack of knowledge, promising people in foreclosure that, due to their connections, they can delay the eviction. You pay them, and sure enough, because of state law restrictions (with the FTA doing absolutely nothing), the eviction is delayed.

Refinance Churners.We’ll get you a new loan and get you out of this mess.” Many of the mortgage brokers that offer “subprime” loans–loans to people in financial difficulties or with credit problems–load them with high interest, high fees, and high costs. The brokers make a lot of money, and you end up with a loan you can’t afford. Don’t forget, every time you refinance, unless you lower your interest rate and pay the closing costs out of pocket, your loan balance will go up, which means your payment goes up and your equity goes down. I’ve seen many people refinance low interest rate, low payment loans that they’ve fallen behind on due to temporary setbacks with high interest loans they could not afford. A Chapter 13 would have given them time to catch up on missed payments and keep their current loan; instead, they end up losing their home.

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Brett Weiss, a senior partner at The Weiss Law Group, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11, and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his colleague, Daniel Press, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the previous Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute and the Bankruptcy Bar Association of Maryland. He has received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, the United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.

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