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In light of the current turmoil in our economy, I would like to remind my readers of the importance of watching out for scams in purchasing or refinancing their homes.
To avoid buying a home with a fraudulent deed, buyers should learn what a deed looks like so they can spot one which might be inauthentic. They should also trust their instincts – if something seems wrong, they should break off a deal and alert the authorities. In addition, they should never sign blank documents or documents with blank spaces to be filled in later. They should also read all documents carefully and be aware of what they are signing.
Home borrowers must be vigilant against predatory lending schemes which target people with poor credit ratings or lackluster employment histories and those with homes in foreclosure. Predatory lenders may refinance small mortgages with terms that harm the borrower (also known as “loan flipping”), factor overpriced insurance or balloon payments into loans, and set high penalties for paying off loans early.
People with homes in default or foreclosure should also beware of the foreclosure rescue scam in which disreputable lenders pressure homeowners to make refinancing deals to “save” their homes. Once the deal is done, the lender ends up owning the home, and the original owner becomes the “savior’s” tenant. The victim can then be evicted when the lender sells the home to a third party for a large profit.
In 2007, New York’s “Home Equity Theft Prevention Act” went into effect to help victims of mortgage rescue scams. Among other things, it allows victims to rescind a sale within two years if the law was broken and the scammer still holds the title. The law also establishes civil and criminal penalties for mortgage rescue scams. To learn more, visit the State Banking Department’s website at www.banking.state.ny.us/hetpyrul.pdf.
If you intend to borrow money to finance or refinance your home, hire your own lawyer to handle the transactions and paperwork. If a broker suggests you inflate your earnings or bank accounts, do not do so. Get everything in writing and avoid verbal deals. Also get a breakdown of your monthly payment and resist efforts to convince you that you can afford something beyond your budget. Also make sure the loan you are obtaining is not more valuable than your home.
If you suspect you have been the victim of a fraud or predatory lender, call the Brooklyn District Attorney’s Action Center at 718-250-2340.
To have your questions answered in a future column, please send them to asktheda@brooklynda.org. |
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