Bad Home Equity Loan can lead to Foreclosure |
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The home equity industry is nothing but a business full of all sorts of fraud and forgery lenders and voracious lending scams. Deceiving customers is the focus of the business and due to this reason, borrowers treading in this business must be very careful.To aid such borrowers and improve their bad finances, home equity loans and line of credit work at tandem but some bad finances can easily lead to foreclosure. There are a lot of lenders or companies barraging people through their answering machines, mailboxes, phone calls or even visiting home and trying to lure customers. In such a situation, people who don't have much knowledge about home equity loans may find themselves the next fraud victim.
All-American Fraud Like baseball and apple pie, financial fraud has become an integral part of American culture, and cases of fraud lenders appear in the headlines daily. But scams on home equity loans are the most reprehensible crime because it is like playing with emotions of people. Such cases often lead to increasing crime rates in the urban areas. Stripping, Flipping and Packing for Foreclosure Scams on home equity loans, which deceive people through fraud means are of various types. But a few of them, which are the most dangerous and which needs to be avoided, are as follows. Stripping, in which lenders offer huge amount loans to borrowers who they know can't repay the amount. Once the time period is over, they foreclose the house and sell it again, thereby stripping away the home equity for their own profit. They target customers and pitch them on debt consolidation tools or to fund home repairs. The second case of crooked lending is flipping. Flippers build up an ongoing revenue stream by "flipping" victims original loans several times. These companies are one step ahead; they provide attractive offers to people. Their main aim is not to foreclose property but to refinance customers' mortgages. They nail customers with excessive fees for each transaction and perpetually turn over the charges into the new mortgages, thus augmenting the borrower's debt load and not reducing it. On top of this, greedy lenders often "pack" charges for credit life insurance, regular life insurance and other added services into the new mortgages. How to protect yourself Check out these tips to be safe and avoid getting trapped in such home equity loan scams. Choose a reputable lender Be careful when choosing a lender. If you're hearing the company's name for the first time, be extra cautious. If it is through a telemarketing call or direct mailer, don't rely on the deal unless you check it yourself. If possible, deal with a bank, credit union or other federally regulated institution. Study the company's background through references and state licensing agencies, which keep tabs on censured businesses and companies. Negotiate and shop Negotiating market fees is the best way to avoid getting scammed. In fact, home equity loans are mostly negotiable, depending on the broker you deal with. But with a bank, you may have to pay set fees that apply to all transactions of a certain type. Know your credit standing Lenders grade borrowers depending on the number of times they've been late on loan or mortgage repayments, filed for bankruptcy, or applied for credit cards in the past few months. Categorizing consumers on each category varies among lenders. But consumers must apply common sense and figure out approximately where they stand. Don't sign until everything is in writing Don't ever sign any incomplete document. The lender might promise to complete it later, but don't rely on this because you'll end up in hassles. If the document is not ready today, it is always better to sign a completed, typed document tomorrow rather than a handwritten application that the broker or lender can change behind your back. Ask an expert Get guidance from any local nonprofit or government-affiliated financial counselor in case of a doubt regarding a home equity loan. Consumer Credit Counseling Service, run by the National Foundation for Consumer Credit, might be of help to you. Conclusion Try not to get lured by just any policy you come across, or else you might end up sorry. Critically examine everything before opting for any offer. Don't feel sad about missing one or two home equity loan offers. There are so many lenders out there that great offers will show up again. |
