Foreclosure Prevention Scams

The rise in foreclosures has lead to a rise in scams against homeowners by individuals offering to help them save their homes.  Foreclosure prevention scams fall into two general categories.  Home equity theft, commonly referred to as “deed theft” scams involve a third party offering to get the homeowner out of foreclosure by refinancing the debt with a new loan.  The deed is transferred, sometimes unknowingly, into the name of the third party (referred to as an “equity purchaser” in NY) who then gets a loan in their name or the name of a straw buyer.  The homeowner is promised they can remain in the home and then buy it back in a year or more, once they repair their credit and can obtain their own financing.  The trick is, the purchaser either evicts the homeowner within a few months and keeps the property to sell on their own, or they obtain a loan for an amount considerably higher than what was owed and keep the equity cashed out, leaving the homeowner with an unaffordable mortgage and a home in someone else’s name.  Read More

Protection & Help for NY Homeowners

In 2008, NY passed comprehensive legislation to add protections for homeowners with subprime mortgages facing foreclosure.  In 2009, the state extended these protections to all homeowners living in their homes.

Homeowners living in their homes should receive a notice at least 90 days prior to the initiation of a foreclosure lawsuit, giving them the contact information for the mortgage servicer and providing a list of at least 5 counseling agencies in the homeowner’s area.  In addition, a court monitored mandatory settlement conference must be held within 60 days of the filing of the foreclosure for all homeowners living in their homes.  Additional resources have been provided to non-profit counseling and legal services organizations statewide to provide direct assistance to homeowners.  Read More

Subprime Mortgage Lending & Predatory Lending

Subprime lending refers to making loans that are in the riskiest category, traditionally to people with less than good, or “prime” credit.  It is generally thought today, though, that many of the subprime loans that were made in the past decade were actually sold to people with good credit.  Subprime loans carry high fees and higher interest rates, and may include a number of predatory loan terms such as significant interest rate increases, balloon payments and payments that cause the loan to negatively amortize (meaning, the principal balance increases over time).  Read More