MPR: “Equity-stripping scams could rise as foreclosures increase”
From the article:
As Twin Cities home foreclosures multiply, so do the opportunities for mortgage fraud.
With more and more homeowners desperate to hold on to their homes, experts are concerned that many are vulnerable to rescue scams like equity stripping.
Not much to add, here. It seems obvious that with more targets, equity strippers and predatory refinancers will step up their activities.
[photo: Athiphat Tanglukdee]
2 Comments on “MPR: “Equity-stripping scams could rise as foreclosures increase””
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It is a frightening situation, I have met with homeowners who do not even understand that the statutory redemption period is running out. One woman that I think was the victim of an equity stripping scam thought she could just refinance, this after her home had been foreclosed on but she had not left yet. There are so many sad stories too. Then there is the issue of how banks can not sell real estate causing vacant houses to sit. This hurts our neighborhoods and communities. It also hurts the real estate market becasue the supply goes up during a time when the demand is going down.
It’s also difficult for the neighbors whose homes are not being foreclosed. Unlike stats I have heard quoted, I’m not so quick to assume that home prices decreased by 20% when a home in the neighborhood goes into foreclosure. However, lots of homes selling at discounted prices, whether because of foreclosure or not, makes it difficult for appraisers to find high comps for the next house that goes on the market without being foreclosed. The foreclosures do affect all homeowners in the neighborhood.
A friend’s daughter wanted to have mom and dad cosign on a loan to “consolidate” her debt. The parents saw the new higher payment compared to the sum of the old ones and wondered where they had gone wrong in rearing their child. If she couldn’t currently make the payments what made the daughter think she could make a new higher payment? It’s the same with equity stripping scams. If you can’t make it now, refinancing is not going to fix the problem!