Payday Loans and Fast Cash Guide | The Bank Foreclosed Homes Epidemic

The Bank Foreclosed Homes Epidemic

There is a new problem in foreclosure in the United States.  The huge number of property owners facing foreclosure offer golden opportunities for schemes to separate the owner from either his property or his money or both.  This is done in a number of ways.  The crooks may offer to save the home from foreclosure.  These schemes have been called equity stripping, equity skimming and foreclosure rescue.  Many times the owners of the property are inexperienced in the real estate field and low-income people. These make easy targets for anyone who offers to help.

The offer to rescue bank foreclosed homes from foreclosure often involves the owner paying huge fees for a new sub prime loan that eliminates any equity he had in the home.  The term “stripping the equity” is used to describe this practise.  Although this is not predatory lending under the usual classification, it is closely related in the excessive and creative fees charged for the refinance.

Inexperienced and mislead homeowners who got sub prime loans to buy that home often cannot afford to keep the home and go into foreclosure.  These same people are likely to find a scam that will promise to rescue them from the foreclosure.  So these vulnerable homeowners pay twice for the privilege of owning a home.  There is a difference between the predatory lending and the foreclosure rescue schemes.  National financial institutions and big banks handled the predatory lending.  Most of the foreclosure rescue is done locally by agents and investors.

As the real estate values went up fast in the years between 2000 and 2005 in the United States, the homeowners had money in their homes. By checking the legal filings on people in pre- and in foreclosure, rescue agents could get the names and addresses of people to contact.  The rescue agents would call, knock on the door, or mail information to the distressed homeowner offering to help.  Sometimes the homeowner would contact a lender or mortgage broker for a new loan.  If the lender or mortgage broker could not help them, occasionally, the lender or mortgage broker would pass the information along to a rescue agent for a fee.  Often these rescue agents would offer the troubled homeowner a sure-fire way to save the house.

These modern day bandits would set the refinance very close to the foreclosure date to create stress.  When the paperwork was signed, the owner signs the title to someone else, sometimes unknowingly.  An investor or the rescue artist gets the house.  These new owners pay the necessary fees to stop the foreclosure and get the home by deed and  get a portion or all of the equity in the home.

The end result is that the original owner gets to live in his own home as a renter or as a purchaser under a new contract.  As mentioned in the bank foreclosed homes guide often times the new payments are even higher than the old payments.   Many states have declared this illegal or closely control the process.  In 2005 Maryland and Minnesota passed laws against unfair foreclosure rescue and deceiving practises.

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