One Family’s Experience with Mortgage Foreclosure “Rescue” Schemes
Paul and Sharon of Chandler, Arizona, were in a tight spot. Paul, an engineer, had been laid off from his job at a Semi-conductor plant in May. Sharon, a stay-at-home mother of three, thought she was used to the ups and downs of the job market in his field. They were in the habit of saving as much as they could for these periods when Paul was looking for work. But, this lay off had come at a very difficult point. They had purchased their ‘dream home’ eighteen months ago, in a newly constructed planned community. They had decided to use a huge chunk of their savings towards the down payment and the upgrades they really wanted. Paul had been sure his job was stable for a few years. They did not think it was going to be a big risk to put their savings towards the house. The lay-off caught the family off guard.
By October, they had missed three mortgage payments. They received a notice from the bank that they were going to be foreclosed upon. As Sharon explains, “We were just panic stricken. We knew we were behind but Paul was interviewing. He was going to get a job very soon. We didn’t want to lose the house. The kids like the school and we have made friends here”.
The received a call from a “Mortgage Rescue” company. The caller, Brad, told Sharon that his company would be able to help her to keep their home. Brad said they had helped many homeowners in the area and would be able to arrange for Paul and Sharon to work things out with the mortgage company. Sharon recalls, “I was very excited. I asked him for references, even. He gave me two names. This guy was really nice and so helpful. He said his company was helping lots of people in Chandler”.
As Brad explained the program, his company would lend Paul and Sharon money to make the back-payments on their mortgage. They would then make the monthly payments to his company that included the original mortgage payment plus a payment on the new loan (at 21% interest). Sharon and Paul would sign a deed transferring the property to the rescue company, temporarily, so that the rescue company could work with the mortgage company to save the home from foreclosure. Brad told her that once Paul secured a job and they had regular income, they would pay off the new loan and the deed would be transferred back. Sharon was thrilled that she had possibly found a way out of the mess they were in.
Paul, however, was skeptical. He did not like the idea of a new loan or the requirement to sign over the deed to the house. He did some internet investigating. His search led him to the county District Attorney’s office which had information about this fraudulent method of operation. The plan which Brad had outlined to Sharon was a scheme designed to take their home and steal any equity they may have had.
When this scheme plays out, the homeowner signs over the deed to their home which gives the rescue company ownership. The former homeowner has to pay back the rescue company for “bailing" them out. This is always at an exorbitant interest rate. The homeowner ends up renting their former home. If the homeowner fails to make rent payments on time, the rescue company evicts the former owner. All rights and equity in the home are lost and go to the rescue company. Often times the rescue company does not pay the mortgage at all, but keeps all of the money paid to them.
Paul and Sharon decided not to accept Brad’s offer of help. They have chosen to go through the foreclosure proceedings and are now looking for an apartment. Bad luck, but it could have been worse for them had taken Brad’s claims at face value. They may have not only lost their home but also the money paid to the fraudulent company.
Be Careful. These Rescue Rip-Offs are designed to take your home and steal any equity you have built up. Look for these Red Flags:
Christine Loschiavo is a Realtor in Chandler, Arizona with the West USA Revelation Realty Company. She specializes in educating buyers and sellers in real estate transactions. She utilizes the internet extensively to give your listings the maximum exposure to potential buyers and to aide clients in finding their perfect home. Ask About Your FREE Home Warranty on home purchases. http://www.HomeSweetAZHome.com