by Roy Primm
"Beware of undercover scams
And other housing related flim-flams
Because dishonest people manage
To take advantage
Of uninformed homeowners with shams."
According to a National Urban League study, black loan denials run twice the rate of whites. Because of this condition, black homeowners are often victims of home loan and home improvement scams more than whites.
Here is a list of the latest scams directed toward black homeowners. The target market most scammers and fraud artists take aim at first.
1. Predatory Lending Scams
Example of predatory lending scams:
1. Charging high fees such as points, administrative fees, loan origination fees and other upfront charges.
2. Packing or selling you unnecessary expensive insurance policies.
3. Charging excessive prepayment penalties.
4. Constant loan flipping or refinancing with little or benefit to the homeowner.
5. Using home improvements as a cover to lure the homeowner into a dangerously bad loan (called loan steering).
2. Home Improvement Scams
1. Contractor persuades homeowner to have unnecessary work or repairs done.
2. Contractor overcharges homeowner for work or materials.
3. Contractor performs lousy work and refuses to finish or make restitution.
4. Contractor recommends homeowner to high priced, excessive fee charging predatory lender to finance improvement or repairs for a cut of the action.
5. Contractor does work of a contractor, but operates without a license.
3. Home Equity Scams
Equity Stripping: This is where a lender gives you a loan. But the loan goes based on the equity in your home, not on your ability to repay or your income. Danger: If you don't pay on time you could lose your home and the equity in your home
4. Loan Flipping
The lender encourages you to refinance a loan over and over, borrowing more money. The danger? Each time you refinance, you pay more fees, interest and points. This practice increases your debt load and the lenders profits.
5. Foreclosure Consultant Scams
With larger numbers of black homeowners facing foreclosure, this is one of the fastest growing complaints to the Federal Trade Commission.
Often the so-called consultant charges a large fee to "save" the homeowners house and credit, but instead vanishes with the money.
Another version of the foreclosure consultant scam goes like this. The consultant convinces the homeowner to sign over the deed to him or her in order to save the house. Next they begin eviction proceedings to kick the victim (homeowner) out or quickly refinances off the equity in the home and disappears.
6. Home Equity Skimming
This is where the homeowner agrees to finance the sale for the buyer (called owner financing). The buyer pays the homeowner a small down payment to build trust. When the house sells and the deed recorded, the new owner goes to the bank, takes out a home equity loan, and disappears.
Note: If the seller had recorded the lien on the new deed, no bank would have made a home equity loan to the new owner.
7. The Blank Documents Scam
This is where the scammer tricks the homeowner into signing a lien document or deed transfer disguised as other legitimate paperwork. For example, a service contract or registered mail receipt.
With scam artist getting more bold and sophisticated it's essential to keep informed on the latest tactics and scams. If you suspect you've become the victim of one of these scams contact your local Department of Real Estate or law enforcement agency. As with all scams, if it sounds too good to be true it usually is ... at least until proven otherwise. Now you know!
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Copyright © MMVII, Black
Homeowner News, Inc.