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

  • We had a home that was foreclosed on in 2008. We had a first mortgage and a second HELC, both by the same bank. They foreclosed via trustee sale, not judicial foreclosure. Can they come after us for the total amount of the HELC?
  • The house is currently in foreclosure.It is being sold at an auction in January.Will they give me a notice telling me I have to get out? Or can they by law,put my stuff on the curb?
  • 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?
  • We are currently renting a home that is being foreclosed on. A realtor is telling me to allow him to put a safe lock on the door and show the home. What are my rights? He claims to work for the trustee.
  • We own a unit in a condo complex that is being foreclosed upon as a whole. We need to know if we have any recourse for the loss of our investment and how this will affect our credit rating.
  • A sibling had a piece of land that was sold in a trustee's sale in June 2016 . It was 2.55 acres and had no single family residence. I am clear that it doesn't fall under the deficiency exemption because of the size of the lot and no home. Since it's been over 90 days, is it safe to say there will be no legal recourse? Can they still send the debt to ordinary collections agent? Thank you
  • how long do we have after told about foreclosure to move out?
  • 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?
  • My husband recently lost his job after working for the company for 10 years they let him go, we couldn’t afford the payment on the house with my pay so we contacted our mortgage they made partial payment plan for us for 12months so we don’t loose our home after some long time of searching for job my husband and used up all the credit cards so we couldn’t pay them all of so we filed for chapter 7 bankruptcy after that my husband found a job and we contacted our WF mortgage loan to start the payment process next thing i know ee got motion filed with the court to forclose our home what should
  • I came across an abandon/foreclosed home and I would like to find out more about taking adverse possession of the property. What do I need to know about doing this? I need the pro's and con's, please! M

STORIES

LegalLEARN

YOUR FEEDBACK IS NEEDED

FIND LEGAL HELP

  • Please select your county of residence below.

    County:
     

OTHER LEGAL RESOURCES

  • State Bar of Arizona
    www.azbar.org
  • Maricopa County Bar
    www.maricopabar.org
    Referral number 602-257-4434
  • Pima County Bar
    www.pimacountybar.org
    Referral number 520-623-4625
  • National Domestic Violence Hotline
    800-799-7233
  • Bankruptcy Court Self Help Center
    866-553-0893
  • Certified Legal Document Preparer Program
    Link

ORGANIZATIONS