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Home Equity Loan – Beware of equity
stripping scam
by Charles Essmeier
The market for mortgage refinancing has been brisk during the last few years.
The boom in business can be attributed to interest rates that have been at or
near historic lows, and to lenders who have more money to lend now that they
aren’t investing in risky tech stocks anymore. Low rates and agreeable lenders
are certainly good for consumers who might be interested in refinancing their
home or taking out a home equity loan.
Those considering such loans should be aware that the booming market for
refinancing has led to increased competition among lenders. And when the
competition increases, so does the number of lending scams. These days, lenders
are surprisingly aggressive. It’s not unheard of to have people knock on your
door, asking if you would be interested in refinancing your home. Lenders that
are eager to lend you money are great, provided that you are actually interested
in borrowing. If you are, then you should be careful. Make an effort to
thoroughly investigate your lender if you do not have a previous relationship
with them. A scam that is increasingly common in today’s market is a lending
scheme known as “equity stripping.” A homeowner applies for a home equity loan,
or perhaps applies to refinance their home.
A lender then encourages the homeowner to borrow more money than they can
afford, and perhaps “assists” by falsifying some information on the application.
The lender does this with hopes that the homeowner will default on the loan.
When the homeowner defaults, the lender forecloses on the property, sells the
property, and keeps the home’s equity as profit.This is one of many scams that
can currently be found in the mortgage industry, and one that can be avoided if
potential borrowers will take the time to do a bit of research before signing on
the dotted line.
Homeowners who are interested in refinancing their home should investigate
prospective lenders before doing business with them. Contacting friends who have
recently refinanced or the local Better Business Bureau would be a good place to
start. Lenders who call you out of the blue or knock on your door are probably
best avoided.
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro
Marketing, a firm devoted to informational Websites, including End-Your-Debt.com,
a Website devoted to debt consolidation information and HomeEquityHelp.net, a
site devoted to information on home equity loans.
This article is reprinted with permission from www.WritingCareer.com |
