There are rough waters ahead for property owners, and there are sharks in those waters. At times like these, there is always someone nearby willing to take advantage of the situation and you. Today, more homeowners than ever before are experiencing mortgage payment difficulties. Many are unable to make the payments due to a loss of income due to the economic downturn, or because they have an adjustable rate mortgage and the rate has increased and they cannot afford the much higher payment. Also, in many markets real estate values ​​are falling and homeowners realize they owe more than their home will be appraised for and can’t sell it. Because traffickers call this being “upside down.”

In this kind of environment, it’s easy to fall victim to the many money-making scams that abound today. One such scheme is to approach homeowners who have fallen behind on their payments through advertisements or research and offer programs to help the homeowner avoid foreclosure. The people involved will meet with the homeowner and offer to deal with the lender on the homeowner’s behalf. The owner is then asked to sign a bit of paperwork, including signing the deed to the property. They offer to take over the property even if you owe more than it’s worth, and ask the homeowner to sign the deed so they can deal with the mortgage company and the homeowner can stop worrying about it. Some even imply that the owner’s obligation ends when he signs the deed in his name.

In many states, you can deed your property to someone even if you have a loan (mortgage), without forcing the buyer or the person you give it to to pay the mortgage. This means that you are still obligated to pay off the debt or loan on the property.

Most, if not all, mortgage loans today have a “maturity at time of sale clause” in the mortgage agreement, and when you give title to someone else, that clause is triggered. The balance due on the loan is now due in full. So if you weren’t in foreclosure before, you probably will be now. You have given your property over to someone and you move out, thinking you can get on with your life. The new “owner” rents the house from him and starts collecting income. He may or may not (most likely won’t) talk to the mortgage company about it. Some do, they make payment promises to stop foreclosure and collect more rent.

Most mortgage companies take about six months before finalizing foreclosure, and in today’s world, this time frame has been extended to a year or more. When the loan is foreclosed on, some of these guys just disappear, after taking 6 months or more of rent, sometimes thousands of dollars, from unsuspecting tenants. Tenants often get an unpleasant surprise when they receive an eviction notice from the new owners, their mortgage company.

There are others who work in this scheme who can, with your deed in hand, negotiate and offer to pay off your loan at a price well below your loan balance, which your lender can accept. Now, when that happens, most of the time you’re still on the hook for the difference between what the new owner paid their mortgage company and the balance of your loan, plus any late fees and attorney’s fees. have accumulated. Worse yet, you may owe the IRS taxes on that difference as income.

So be very careful when dealing with anyone who offers to take care of your problems, you may be creating a real nightmare. When it comes to avoiding foreclosure, it’s much better to try to renegotiate your loan yourself or use your own attorney. There are refinancing programs available, with more to come, that will refinance your loan even if your credit has deteriorated.