Wednesday, August 19, 2009

Lease-Back or Repurchase Scams Prey on Desperate Homeowners

Scammers just love to kick people when they are down. The Lease-Back or Repurchase scam has been hot for awhile and people are still falling for it. In this case the potential victims are homeowners who are delinquent in mortgage payments.

The scammer promises to pay off your delinquent mortgage, repair your credit and possibly pay off credit cards and other debt. However, in order to do this, you must “temporarily” sign your deed over to a “third party” investor. You are told that once your credit is repaired you’ll “have the option” to buy back your home. Plus, you can stay in the house. You’ll just be renting, this is supposed to help you build credit also.

The trouble is once you have signed away your rights in your property, you may not be able to repurchase the property later, even if you can and want to. Once you become the renter you might realize that conditions have been set that make it impossible for you to back your home. Often this includes ridiculous time-limits and an exorbitantly high buy-back price. Your rent could be raised unreasonably and You could also be evicted by the investor owner. Typically, after the deed is signed away, the property changes hands numerous times. The scammer may have taken a new mortgage out on your home for hundreds of thousands of dollars more than your mortgage, making it impossible for you to buy back your home. Or your home may be sold and you could be tossed out.

Be careful, when things get tough the first thing you should do is consult a company that you trust—like your credit union or mortgage holder. There are legitimate programs to help homeowners who are having difficulty making payments.

Even if you are not facing foreclosure, but want to reduce your mortgage payments, or improve your debt situation, your credit union may be able to help. It doesn’t hurt to ask the credit union to review your situation; in fact there isn’t even a charge for this service. And improving your financial outlook is nothing to be embarrassed about—it’s a smart thing to do.

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