Non-English speaking homeowners are the latest victims of a new scam in California’s Central Valley.  Con artists seem to be targeting Latinos who are facing foreclosure with a promise of eliminating their existing loan and replacing it with a mortgage that is often as low as 25% of the original loan amount.

People who are on the verge of losing their home will often try anything, and want to believe this will work.  The scammers file a fraudulent reconveyance with the county recorder, showing that the old mortgage has been paid off.  They then charge the homeowner thousands of dollars for a new loan.  In the end, the homeowner loses the money spent on the fake new loan, and they lose their home when the legitimate lender forecloses.

Another approach to the fraudulent reconveyance scam is the “vapor money theory”.  According to this scam, homeowners are told that federal banking systems are invalid and mortgages cannot be legally enforced because they rely on wires or checks as opposed to gold or cash.  The old loan is “eliminated” through a fake reconveyance and the homeowner is charged thousands for the service.  Once again, the homeowner loses his money and his home.

In another twist on the scam, homeowners are told that their mortgages will be pooled with others and sold for pennies on the dollar, allowing the scammer to issue a new loan with a lower principal amount.   Still other homeowners are told that federal bailout money rewards the new note holders for taking over underwater mortgages.

The bottom line is that there is no cure-all for eliminating your mortgage and if it sounds too good to be true, it probably is.  

  • Be wary of anyone who says you don’t have to repay your debt because of secret laws.
  • Don’t pay up-front fees.
  • Avoid anyone who encourages you to stop paying your mortgage without talking to your lender.
  • Run away from anyone who suggests you pay them instead of your lender.
  • Be wary of anyone who suggests they have a special connection with any government agency or bank.

If you are having trouble paying your mortgage there is help, and several options.  Please don’t hesitate to contact me for more information.