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Mortgage Fraud Schemes Homeowners Fall Victim To

Brian P. Nov. 20, 2016

It seems like almost every day, Americans are being kicked out of their homes because of lenders illegal, reckless or fraudulent actions. Desperate homeowners who don’t want to lose their homes are easy prey for mortgage companies.

If you were duped by an unscrupulous lender or company, you are not alone. Thousands of homeowners are scammed each year. Just this year, mortgage giant Bank of America was ordered to pay $46 million in wrongful foreclosure case involving dual tracking. The judge called the Bank of America’s behavior “heartless” and “brazen.” The judge also said that the bank displayed “dishonesty” and “institutional obstinance” when it improperly foreclosed on a couple’s home. The ordeal was so unbelievable for the homeowners that the judge described it as a “Kafkaesque nightmare.”

Many homeowners don’t even know that they have been duped by their mortgage company. However, fraud can occur throughout many different parts of the foreclosure process. It is more common than most people realize. Knowing about the most common mortgage fraud and knowing your rights when it comes to foreclosure is important to protect your home from wrongful foreclosure.

Mortgage Scams

  • Dual Tracking

This type of Loan Modification Fraud happens when a mortgage company or loan servicer moves forward to foreclose on a homeowner while they are being considered for a loan modification. Federal laws were enacted in 2014 that forbid mortgage companies to foreclose on a borrower while they are working out a loan modification. This crime is particularly challenging for homeowners because they are given a false sense of security that they will get help from the bank—while the bank is just moving forward to foreclose. Banks can be held liable for this practice. There are strong protections in place for homeowners that are victims of dual tracking.

If you believe that you might be a victim of dual tracking and your lender foreclosed on your home, contact an experienced mortgage lawyer today to find out if you are eligible for compensation.

  • Not Following Federal Home Modification Guidelines

The Home Affordable Refinance Program both have concrete guidelines that lenders must strictly follow. Many homeowners have been forced into foreclosure because banks fail to follow the rules. For example, mortgage companies will routinely tell borrowers that they cannot apply for loan modification programs if they are current on their mortgage. They may even encourage the homeowner to fall behind on payments to qualify, which can lead to disastrous results like damaged credit scores and tons of penalties and fees.

  • Balloon Payment Fraud

A balloon payment is a large lump sum that is due at the end of the loan term. Sometimes, lenders will tack on huge balloon payments, especially when doing loan modifications. This practice is illegal. All lenders must disclose the full terms of the loan in writing.

Wrongful Foreclosure Lawyer – Free Legal Advice

If you know or believe that you are facing wrongful foreclosure, talking to a wrongful foreclosure lawyer is the first step in getting justice for you and for others who have been affected. A foreclosure lawyer will be able to assess your situation and come up with the best way to move forward on your potential case.

Call us and we will connect you with a Los Angeles mortgage lawyer. They give professional legal advice for FREE!