Avoiding Mortgage Scammers

Many people blame the recent explosion of mortgage foreclosures and national mortgage industry trouble on greedy buyers moving into homes they cannot afford, but the simple truth is that an abundance of factors have played their hand. Equity thieves are making matters much worse by conning homeowners who have fallen behind in their payments. Once a homeowner or mortgage borrow falls behind, the scammers contact them and promise to help them secure new financing in order to save their mortgage. But for some reason, it does not quite work out for the homeowner.

The scam is extremely complex, involving many parties including the appraiser of the home, mortgage broker, and even straw borrowers, and it is known in the world of mortgages as “Equity Stripping.” Basically, the scammer convinces the homeowner to sign the title of the house over to a posing buyer, who will take out a new mortgage for all of the homes current value. The con artist makes it appear as though the paperwork only promises the “buyer” the right to rent the home with the option to buy, but the rabbit hole doesn’t stop there.

After closing costs on the new mortgage, there is a sizeable amount of money left over because of the equity already in the home. The broker pockets this money, using a second straw buyer to purchase the home at the appreciated value of the home. After closing this these closing costs and fees, the scam broker then pockets another check for the amount of the appreciation on the home. All the while, the original homeowners know nothing about the second buyer, nor do they know about the fact that payments have not been made by the first straw buyer. Without a quib, the home goes into foreclosure, and the homeowner is left without a home or any of the equity they might have had.

This is an incredible lucrative scam that is popping up hundreds of cases around the country. It is a basic violation of trust, against people who are so incredibly desperate to save their home from foreclosure. They want to believe there is an easy way out, and are usually willing to suspend their disbelieve for the possibility that it might actually work. One way to protect against this kind of fraud is to avoid mortgage brokers that approach you during time of foreclosure. Do your research and explore the background of particular mortgage brokerages or individuals so that you trust their knowledge and integrity completely. This may be on of the most crucial financial decisions you ever make. Take your time and make the right choice.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company, offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Mortgage Refinancing Options

Today’s refinancing possibilities are virtually endless. People are able to accomplish almost any option conceivable in regards to refinancing loans or mortgages as veteran homeowners. However, most of these options can be summarized into two basic types of refinancing, “Cash-Out” and “No-Cash-Out.”

Cash-Out refinancing is just like it sounds. The purpose of refinancing is to obtain cash out of the equity you already have in your home. Using this cash to pay debts, remodel, or make investments consolidates these expenditures into the mortgage that you already have. The amount that can be borrowed using cash-out refinancing is directly determined by the difference in the balance of your mortgage versus the amount your home is actually worth in the buying market. Cash out refinancing can be just what many people need to survive through difficult financial times. It is extremely helpful for a homeowner to have the possibility of extracting this equity from their home before the problems become too great. Debts can be paid and revolving accounts satisfied so that the homeowners credit is not ruined. Another great thing about using this equity is that the interest paid on a mortgage is tax deductible, while the interest rates on most credit cards and revolving accounts are not deductible.

Rate and Term Loans, or “No-Cash-Out” refinancing, is the best way to lock in a new interest rate. If after paying on a mortgage for several years, the prime interest rates drop, then you might want to consider refinancing to lower your payments and fix the interest at a better rate. This type of refinancing is only useful if you are not planning on taking out cash from the equity of your home. The purpose of no-cash-out refinancing is not to consolidate debts or make home improvements. You are simply refinancing with the hopes to have a smaller monthly payment on the same mortgage you already have, which is only made possible by a drop in interest rates.

Refinancing can be extremely helpful to people who are already making monthly mortgage payments. Whether times are tough or you are simply looking to lower your payments, refinancing makes it possible to reorganize your loan to better server your needs. In terms of dept consolidation, cash-out refinancing is one of the best ways to most efficiently pay those debts by lowering the interest rate to that of your mortgage and giving you one simple monthly payment to make. For most homeowners and potential buyers, it is simply comforting to know that the most important loan or investment they will probably make is subject to some renegotiation.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company, offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.