It Is Crucial For Homeowners To Be On The Look Out For These Scams And Deceitful Activities

Posted on October 25, 2009
Filed Under foreclosure | 1 Comment

We need to acknowledge it, being a homeowner is what lots of folks have the desire for but along with that part of the American goal can come a multiplicity of troubles. There are countless trials and tribulations facing homeowners now and in this article I will bring to light some.

Loan Modification Fraud

A lot of homeowners are searching for a way out from their “upside down” mortgage loans or they have hit challenging times due to work cut-backs or layoffs. These unsuspicious homeowners are prime targets for loan modification scams. The homeowners facing fiscal conditions are anxious for help and trust in loan modification companies to aid them resolve their mortgage problems. Many of these “less than true blue” loan modification companies have recommended these innocent homeowners to discontinue making their home loan mortgage payments while the loan modification company purportedly “settles” with the lender on the homeowner’s behalf. As a rule loan modification fraud involves the collection of upfront consulting charges and then when the money is collected no relief is given. Disastrously, in lots of of these cases because the company does nothing to aid the homeowner, the home proceeds into foreclosure.

Loan Modification Fraud Deterrence in Several States

Loan modification fraud is going on all over the nation but here are a small number of the specific state examples of which to be wary.

California

In California home modification loan complaints rose from 27 in 2007 to 2000 as of October 2009. Loan Modification complaints have been filed against real estate agents, loan brokers, lawyers, foreclosure consultants, and loan modification companies. To help reduce these complaints all foreclosure consultants must now register with the state’s Attorney General’s office and post a $100,000 bond to be permitted to operate business with authorization.

On October 11, 2009 a law was passed to help prevent added loan modification fraud. The law says in part that it is illegal for any individual or group to require or get paid any up-front or any other type of pre-payment compensation for loan modification or any other mortgage loan avoidance services. To study the law in its entireness, “California Depart of Real Estate Consumer Alert Advance Fees for Loan Modifications Are Now Illegal in CA” click on: http://www.dre.ca.gov/pdf_docs/FraudWarningsCaDRE03_2009.pdf

Nevada

John Kelleher, who is the leader of a Nevada mortgage fraud task force, mentioned in a recent conversation that the Attorney General of Nevada, Catherine Cortez Masto, says that Nevada leads the nation in mortgage fraud. Some of the mortgage fraud schemes that they have seen companies use are:
* fake appraisals that exaggerate home assessments
* amplification of purchaser’s incomes
* falsifying loan documents
* forgery of checks and loan records

Per Nevada law, home loan modification and foreclosure consultants must be licensed by the mortgage branch and it is a requirement that they post a $75,000 surety bond.

Maryland

Due to plentiful fraudulent practices, the state of Maryland enacted the “Protection of Homeowners in Foreclosure Act” to bail out homeowners facing foreclosure. It requires that foreclosure consultants are required to be licensed, are required to give particular information to homeowners, and stops them from the payment of upfront charges. One type of fraud enacted on these unfortunate homeowners is to take title of the property in trouble and then bleed dry the equity from it.

Michigan

There is new legislation in the Michigan Senate to fight foreclosure consultant loan modification scams. Their plan is to demand fundamental qualifications and regulations, require lenders to post their foreclosure and loan modification rules on the web, and demand companies to notify homeowners if the lender sells their mortgage to a different party.

The Making Home Affordable Program by the Obama Administration

Foreclosure, loan modification, and mortgage reconstruction cons are likely to insist on up-front charges and often pretend to be part of the legitimate government program to help homeowners keep their properties. These swindlers ask for fees for their service and then when they get paid the cash, they do nothing for the homeowner.

The Making Home Affordable Program is part of the Obama Administration’s strategy to uplift the economy and help get the housing market back on top. It provides two solutions; one of which is refinancing and the other is modification of the current home mortgage loan. The counseling service is supplied by the government for free and they can help you with determining what options are available to you. To contact them call 1-888-995-HOPE (4673) or go on the Internet to http://makinghomeaffordable.gov/index.html.

Real Estate Fraud

One example of real estate fraud is when a loan broker-type individual uses a “straw buyer” to sign loan closing documents. A straw buyer is a person who allows their credit and other personal details to be used to acquire a mortgage loan on a house that they never planned to inhabit or manage. The broker representing the straw buyer may provide a fraudulent mortgage application on the behalf of the purchaser/straw buyer. The buyer’s application may have false information such as magnified income statements and/or work records. When the income of the sale are dispensed at closing, the broker pockets his share of the funds. The home typically ends up in foreclosure because there wasn’t a real purchaser; therefore no sale really took place.

Mortgage Fraud

Mortgage fraud is usually not revealed until the house goes into foreclosure. At that point in time it is determined that the collateral, otherwise the borrower’s guarantee to the lender of the mortgage of a specific property to take care of the reimbursement of the home loan mortgage, is not ample enough to take care of the mortgage loan. In most cases the loan applications contained fabricated statements associated to earnings or other assets.

First Time Home Buyer Tax Break Fraud

In February 2009, as part of the economic stimulus bill, the “First Time Home Buyer Tax Break” measure was adopted. Its desired outcome was to expand home sales and help the plunging housing industry. The measure is scheduled to wind up at the end of November but there is some dialogue of continuing it. The measure gives an $8,000 tax credit to first time home buyers. Claims for the tax credit have reached over one million as of October and has grown home sales to roughly 350,000 homes that more than likely would have not sold if it weren’t for the inducement.

There have allegedly been 100,000 claims that are currently being investigated by the IRS for persons attempting to collect falsely on the first time home purchaser tax break. Some are insinuating the rationale that there are so many unjustified claims are because the tax credit is not approved at the point in time of the sale but later on when income tax documents are filed or amended. It is assumed that a number of home purchasers who are not authorized for the tax break are filing for it falsely.

Homeowners must be attentive to a selection of cons and scams which they may well come in contact with. With the triumph of the ambition of owning your own home, comes a quantity of trials and tribulations you should be concerned of and prompt to deal with.

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One Response to “It Is Crucial For Homeowners To Be On The Look Out For These Scams And Deceitful Activities”

  1. It Is Crucial For Homeowners To Be On The Look Out For These Scams And Deceitful Activities IM Consultant on October 26th, 2009 1:35 am

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