A recent article in the New York Times reveals that many predatory housing lenders have run out of potential victims and have re-organized themselves as "loan rescue" firms. They try to insert themselves into the relationship between a borrower and his bank. With unemployment on the rise and home prices still declining in many areas, the predators have found a new market for scams.
Non-profit and government resources for troubled homeowners are being drowned out by the aggressive sales tactics of predatory firms, who relentlessly stalk those listed in the public record as being close to foreclosure. In some cases, the loan rescue firms offer the same services a government or non-profit agency might provide but at a much higher price. In other cases they might simply take the money and run.
In one common scam, predatory firms offer rescue loans to struggling borrowers "but homebuyers are neither rescued nor do they actually receive loans," according to Dr. Mark Dotzour, Chief Economist for the Real Estate Center at Texas A&M University. Instead, "the predatory lender offers a 'loan to get caught up' on the delinquent mortgage payments. In exchange for the rescue, the homeowner signs over the title to the predator, who promises that the homebuyer may remain in the home while paying rent. The predator then sells the house to someone else, and the original homeowner gets an eviction notice."
If you know someone who may need help with their mortgage, tell them to contact a counselor approved by the U.S. Department of Housing and Urban Development.
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