foreclosure pueblo
Real systems take advantage of homeowners and lenders
As the housing bubble is overtaking more and more scam artists real estate are launching attacks on homeowners. The IRS has initiated 235 cases of fraud against persons in 2005 and the number is expected to remain stable or increase during 2006.
The types of fraud vary, but the most common fraud cases are related to mortgage fraud. Mortgage Fraud are contributing the largest number of foreclosures among homeowners. One type of fraud is called a straw purchase. In this case the sellers artificially increase the value of a property to have friends to increase the supply of the property and a backup with forged appraisals. The lending institution would issue then a mortgage, the seller could collect the money, and the buyer could disappear and not even make a mortgage payment. The lender is left with the bag on the mortgage.
There are several other programs that feed on homeowners. In one of the most common types of scams, homeowners are signing the transfer of shares to their homes as "collateral" and take loans they could not afford. This could easily lead to a landlord to enter foreclosure. In some cases owners are encouraged to fudge claims annual income to qualify for a larger loan. The result is predictable, the homeowner enters execution mortgage.
A typical scenario that occurred in Pueblo Colorado is played throughout the country. A home appraiser overvalued by fraudulent home values comparable that buyers can purchase a home with no down payment. Exclusion new owner the result was predictable.
Also common are techniques that owners strip your equity in your home. Homeowners in debt are easy targets for this type of fraud. Sub-prime loans are pushed by mortgage brokers who do not have no liability to the homeowner. The homeowner usually go for quick money, but lose all the equity in your home on the road. More and more states are establishing new regulations to help protect against this activity.
Another fraudulent activity centers around the use of lease options. The objective of this system is that tenants can not afford the down payment. Of course not all lease option deals are fraudulent, however, the tenant must do their homework. Also the tenant must have a realistic view of their financial situation and determine if they have money for a down payment when exercising the option lease.
In this scam the owners sign the tenant with an option to purchase the property. The landlord charged the tenant up to $ 10,000 for the right to purchase an option. An extra amount of money over the rental market values, will be charged to the tenants of each month. The money paid by the lease option and the extra rent money is supposed to go toward the down payment if the tenant exercises its purchase option.
Two years later, the tenant has an equal chance of qualifying for a mortgage as when we began the lease option. Astute owners, knowing their markets real estate very well, often the price of the option to rent above the market value. In a series of lease-option agreements that were reviewed, it became clear that the owner had no intention of selling the property. In some cases the owner tried to get out of the operation when the tenant was able to reach an initial payment and the house was at or below market value.
Homeowners should Take special care when purchasing using the options of lease or refinancing. Although there are laws governing fraudulent activities without understanding the market and their own finances, borrowers can get into the water very quickly. As owner of a house I am constantly bombarded with flyers in my mailbox and marketing calls on nights and weekends. These ads promise me all sorts of difficult believe, too good to be true offers refinancing. Many of these calls are from call centers overseas. Any refinancing agreement worth can be found if you look hard enough. No need to address far unregulated mortgage lenders who promises the moon. It's worth taking your time and be polite.
This article only begins to scratch the surface. Tips to attract real estate investors are also prevalent. These normally tend to be like you get some kind of investment property at a low price in an incredibly hot area that will double in the next two years and a management company ready to screen their tenants and look after your property for a small price. This scenario may not always be. Ask the Investors who poured into the Phoenix market and still maintain their properties. The housing bubble has burst, but the markets have changed. Be careful!
About the Author
Andrew Goldman is president of Metal Rabbit media services, the operator of
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He has written a number of articles on finance and environment over the last ten years.
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