Foreclosure Article


Predatory Lending Schemes and Scams

Beware Of Predatory Lending Schemes

Most mortgage lenders are reputable and provide a valuable service by allowing families to own a home without saving the thousands or hundreds of thousands of dollars necessary to buy it outright. However, a few, unscrupulous lenders, especially those who make high risk second mortgages, engage in predatory lending practices that can increase the likelihood that a borrower will lose his or her home to foreclosure. These abusive practices include making a mortgage loan to an individual who does not have the income to repay it, charging excessive interest, points and fees or repeatedly refinancing a loan without providing any real value to the borrower.

Borrowers facing unemployment and/or foreclosure are frequent targets of predatory lenders because they are desperate to find any "solution" to their default.

Homeowners frequently receive refinance offers in the mail telling them that they have been "pre-approved" for credit based on the equity in their home. When you are wondering how you are going to pay your mortgage and other bills, it may appear very attractive to borrow against your house. But consider this, if you cannot make your current payments, increasing your debt, even if you get some temporary cash, will make it harder to keep your home.

Beware of Scams:

  • Equity skimming: a buyer offers to repay the mortgage or sell the property if you sign over the deed and move out.
  • Phony counseling agencies. Some groups calling themselves "counseling agencies" may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale. If you have any doubt about paying for such services, call a HUD-approved housing counseling agency at (800) 569-4287 or TDD (800) 877-8339. Do this before you pay anyone or sign anything. Don't sign any papers you don't fully understand.
  • Make sure you get all "promises" in writing.
  • Beware of any contract of sale of loan assumption where you are not formally released from liability for your mortgage debt.
  • Check with a lawyer or your mortgage company before entering into any deal involving your home.
  • If you're selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. You can contact the Arizona Office of the Attorney General Consumer Fraud Unit for this type of information.
  • Do not sign anything you do not understand. It is your right and duty to ask questions.
  • Information is your best defense against becoming a victim of predatory lending especially for a desperate homeowner! 

Where to Report Suspected Predatory Lending – homeowners can contact the Arizona Office of the Attorney General, or call 1(800) 352-8431 to get information on what steps to take to file a complaint. You may also want to look at Predatory Lending Brochure from the Office of the Attorney General. 

For more information about Predatory Lending go to:

HUD's Predatory Lending Web Site

Attached Document
.pdf Predatory Lending Schemes and Scams


Comments:

QUESTIONS

  • Can my lanlord come after me for the money if i break my lease early, and the house is in foreclosure?
  • AZ dept of Housing sent us to you to file a complaint against Bank and Mortgage Company (Proper business names redacted).  How do we mail or email our five page complaint to you? (Personal information redacted)
  • The house I am renting is about to go into foreclosure. My landlord wants to remove the storage shed, window wrought iron around the home as well as the sun lights. Is this legal? What are my rights?
  • Are there any tax consequences for the state return after a forclosure or short sale?
  • How can I get back my property I sold to someone (deed of trust) who promised to pay me monthly for 30 years arrangement, but become delinquent in payments? How to foreclose it from home owner? Does home owner covered by AZ anti-deficiency law?
  • Should I be held responsible for the HELOC on my house held by a different bank than my first mortgage that was foreclosed upon?
  • Is the law the same re foreclosure the same for a mobile home? I have vacated the property. Can my wages be garnished?
  • How do I find out if there is a sale date for my home that is in foreclosure?
  • I have recently reviewed our finances and determined that we can no longer afford our home. We are not late and have not missed any payments. I have come in contact with a law office based in CA that offers loan modification, short sale, and deed in lieu services. If we opt to pay someone to negotiate for a loan modification with our lender am I less likely to fall victim to scam with a law office?
  • I was in the midst of a loan modification review and was told they granted me a 30 day extension on my foreclosure. I have now come to find out they never did the 30day extension and my house was sold. Do I have any legal recourse?

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