(Part III) Con Artist Reveals Mortage Scams : “Foreclosure Fraud”
According to statistics, nearly 5% of borrowers are behind on mortgages. Figures are projected to increase. As the rate rises, buyers with variable interest rate loans cannot afford their repayments anymore.
Brent Barber’s third mortgage scam is in victimizing people who are delinquent on their mortgage payments.
Here is how he conspires a foreclosure fraud:
1) Approach a homeowner who is unable to meet his loan payments.
2) Offer to assume the loan and advise that you will rent out the house to cover the repayments.
3) He would leave the loan under the owner’s name, making the owner still legally responsible for the repayments.
4) He would collect the rent and conceal the default notices from the homeowner.
5) It usually takes three months before the lender starts foreclosing the subject property. Barker can find a way to hold it off for up to a year. Thus, he could could end up with up to a year’s rent from his victim’s home.
Barber did something similar to his straw buyers‘ homes. He continued to collect rent and stopped making repayments, leaving his straw buyers with mortgages they can’t afford.
Barber’s advise to avoid this scam:
1) If someone offers you a deal that he would assume your loan, verify that the necessary documents were filed.
2) If you’re behind in your mortage repayments, rent out your property yourself. Move to a cheaper property so you can add the difference to your repayments.
3) Ask the tenants for a deposit equivalent to the amount you need to update your repayments.
4) Indicate a no sub-lease clause in the contract.
5) Verify the tenant’s rental history.
6) Set-up a credit score alert. This will notify you if there is a change in your credit file, such as an overdue account.
My advise:
Don’t maximize your buying capacity when taking out a mortgage. You can read more about this, in my previous article "Three Basic Rules in Real Estate Investing". If you need to rent out your property, do it yourself. You need every bit of income you can get. If you don’t have the knowledge on how to do it, go to a licensed real estate broker. If you need help, approach the right people such as lawyers, real estate brokers and even your lender. Don’t take any recommendations, specially any proposals or deals from anyone who is not an authority on your situation. During your vulnerable moments, you can easily fall prey to a con artsist like Barker.
To read more about this article, go to usatoday.com
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