'Mortgage vultures swoop on US housing crisis
By Philip Sherwell in New York,
By Philip Sherwell in New York,
Sunday Telegraph
08/07/2007
Home owners who have become mired in debt during America's growing housing crisis are falling prey to a booming new industry in "mortgage rescue" scams that end up depriving them of their properties permanently.
The scams lure owners into signing over their deeds to a temporary purchaser after being falsely assured that they will be able to buy the property back when their financial situation improves. Often the paperwork is so complicated that they do not realise they have surrendered ownership.
It is the latest example, say critics, of the predatory financial practices that have exacerbated the slump in the American housing sector.
During the previous decade-long housing boom, high-risk "subprime" mortgages were granted with few checks to borrowers on low incomes or with bad credit, many of whom cannot now meet their repayments. Repossessions in the first quarter of this year were up 35 per cent on the same period last year, itself a record for mortgage defaults.
Against this depressed backdrop, "rescue" scams have proliferated as companies aggressively target troubled homeowners when their financial woes are made public in local authority records.
Aleem Morris was one of them. After losing his job as a forklift operator, the 30-year-old fell behind on the mortgage repayments on the house in Newark, New Jersey, where he lives with his grandfather, a frail pensioner.
Despite borrowing money from family and friends, he owed $148,000 and his home went into the repossession (or "foreclosure") process. It was then that he replied to a flier from a "foreclosure specialist" with the message: "Are you losing sleep because of mounting debt and harassing bill collectors?"
Mr Morris said the company offered to purchase the house from him, give him $20,000 in cash and allow him and his 81-year-old grandfather to live in the family home rent-free while he worked to improve his credit rating so that he could buy the property back.
"It sounded like a great offer. I had no suspicions," he said last week.
Although Mr Morris received his $20,000 and his debts were paid off, he was no longer the owner of the house and $127,000 from the sale went not to him but to a New York finance company.'
08/07/2007
Home owners who have become mired in debt during America's growing housing crisis are falling prey to a booming new industry in "mortgage rescue" scams that end up depriving them of their properties permanently.
The scams lure owners into signing over their deeds to a temporary purchaser after being falsely assured that they will be able to buy the property back when their financial situation improves. Often the paperwork is so complicated that they do not realise they have surrendered ownership.
It is the latest example, say critics, of the predatory financial practices that have exacerbated the slump in the American housing sector.
During the previous decade-long housing boom, high-risk "subprime" mortgages were granted with few checks to borrowers on low incomes or with bad credit, many of whom cannot now meet their repayments. Repossessions in the first quarter of this year were up 35 per cent on the same period last year, itself a record for mortgage defaults.
Against this depressed backdrop, "rescue" scams have proliferated as companies aggressively target troubled homeowners when their financial woes are made public in local authority records.
Aleem Morris was one of them. After losing his job as a forklift operator, the 30-year-old fell behind on the mortgage repayments on the house in Newark, New Jersey, where he lives with his grandfather, a frail pensioner.
Despite borrowing money from family and friends, he owed $148,000 and his home went into the repossession (or "foreclosure") process. It was then that he replied to a flier from a "foreclosure specialist" with the message: "Are you losing sleep because of mounting debt and harassing bill collectors?"
Mr Morris said the company offered to purchase the house from him, give him $20,000 in cash and allow him and his 81-year-old grandfather to live in the family home rent-free while he worked to improve his credit rating so that he could buy the property back.
"It sounded like a great offer. I had no suspicions," he said last week.
Although Mr Morris received his $20,000 and his debts were paid off, he was no longer the owner of the house and $127,000 from the sale went not to him but to a New York finance company.'
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