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article imageBorrowers Beware: Forclosure Scams Hit Property Owners Hard

By Lisa Angotti     Apr 1, 2007 in Business
Property owners in jeopardy of losing their home will do anything to try and save it. That's why many are willing to believe organizations who claim they can help, but not before they fall victim to a "foreclosure rescue scam."
Scam artists are working with home owners to transfer the house title to a fake buyer, borrow large amounts of money against it and pocket the loan proceeds. So not only are home owners being cheated out of their property, they are also losing hundreds of thousands of dollars in equity they've built over the years.
"We thought everything was going to be taken care of," said Teri Allen, an Orange County, California resident. "Then all of a sudden … we started getting notices of default in the mail."
At least 10 families in Orange County including Teri Allen's have been victims of "foreclosure rescue" or "equity skimming" scams.
Victims are talked into signing deeds – or their names are forged on deeds – "temporarily" transferring ownership to fake buyers. The scammers are able to get lenders to offer them full market value so they arrange a new loan at market value, pay off existing loans and pocket the profit. These homes usually end up in foreclosure anyway since the criminals have no intention in paying off the loans.
The FBI is currently investigating an individual and his group for cheating 100 homeowners throughout Southern California out of about $12 million.
Experts say that the scams are contributing to the current subprime loan industry meltdown. As many predicted, homeowners are overextended because when prices hit an all time high, lenders became extra lenient with home loan qualifications. Now many home owners need out of their situation now, as they continue to drown in high mortgage payments and rising interest rates. The housing slowdown is clearly evident, as For Sale signs are popping up everywhere, and staying up.
"We will see more and more of that as foreclosures continue to rise,"
said Peter Norell, who leads an FBI white-collar crime unit in Santa Ana. "All kinds of scams come out of the foreclosure market."
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