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Home Equity Loan Fraud |
Many couples work hard and long, building equity in their home to use someday for retirement
or that long waited for vacation. Sadly, many couples are ripped of through a variety of loan
frauds, stripping them of everything they worked to achieve. If you are already a homeowner
or starting to think about buying a home, you should consider ways to protect your investment.
One of the best organizations serving people nationwide in fighting home loan fraud is the
Consumer Action, founded in 1971. This nonprofit organization does an excellent job in
providing guidance for consumers through a number of channels. They direct consumers with
complaints to the appropriate agency, they advise consumers of their legal rights, and publish
educational information in a number of languages to include English, Korean, Spanish,
Chinese, Vietnamese, among others.
One of the biggest frauds being carried out is that a contractor will show up at your door,
offering to do high dollar maintenance or improvement on your home. All you have to do is
take out a home equity loan and in return, you will have an even greater home, which will build
your equity even higher. If you are ever approached about taking out a second mortgage you
need to run - fast!
Most home equity fraud occurs when the terms of a loan are grossly misrepresented. This
type of fraud started back in the 1980s and even though the Federal government has
implemented several disclosure rules, it continues to be a problem. The problem for the
homeowner is that these people committing the fraud are incredibly good. They have an
amazing skill at talking homeowners into excessive loans with payments and interest so high
the homeowner soon forecloses, losing everything.
Another way these frauds work is they will do everything in their power to get you to sign blank
documentation. They will promise you the moon, swaying you with charm and phony expertise.
After you sign, they fill in the blanks to suit them. Obviously, the number they put into the blanks
is nothing close to what you verbally agreed to. For instance, today's interest rate for
mortgages is anywhere from 5% to 8%. With this type of fraud, you will get the paperwork
back and see they filed in the interest rate at 30% or more! Another way the equity loan fraud
will get you is they will fill in the appropriate interest rate, making the monthly payment seems
okay. However, if you were to look closely at the contract, you would see a huge payment due
at the end of the loan that is ridiculously high.
Although anyone can be targeted for this type of fraud, typically the people sought out are
individuals with financial troubles and the elderly. They seek the people with financial trouble
because they are usually desperate and see this as a quick way out of debt, without realizing
they are only getting themselves in deeper. For the elderly, the home is often free and clear
of title, which mean there is much more equity to steal. Beware!
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