Facing potential foreclosure is traumatic enough. But approach any offer of assistance with caution. Some unscrupulous people, under the guise of helping, aim to cheat struggling homeowners out of any equity they’ve built up. You could be tricked into forfeiting money that is rightfully yours – and still lose your home.
Foreclosure “rescue” and equity-skimming scams are on the rise. The New York Times and KOMO TV have reported on how these scamsters are capitalizing on borrower desperation and complex mortgage loan documents.
A Federal Trade Commission study found that many consumers don’t understand their own mortgages. In fact, 9 out of 10 borrowers could not identify upfront fees on mortgage loans and half could not specify the amount they were borrowing.
Attorney General Rob McKenna, the Washington Bar Association and Northwest Justice Project hosted a Foreclosure Think Tank last Friday in Seattle . The think tank brought together representatives from government agencies and nonprofit organizations, private attorneys and industry professionals. From this, we will be forming work groups to further explore ways to reduce the rate of foreclosure in Washington, help consumers who face the loss of their homes and crack down on fraud.
Nationally, the percentage of U.S. mortgages entering foreclosure hit its highest point in more than 50 years earlier this year. Washington has the 18th highest foreclosure rate in the country. Our state’s foreclosure rates had been declining since 2001, but rose slightly at the end of last year.
Craig Nolte of the Federal Reserve Bank of San Francisco said subprime ARMS (adjustable-rate mortgages) now account for nearly half of conventional loans entering foreclosure, even though they make up less than 10 percent of the market. Nolte said that nationwide more than $100 billion in loans are scheduled to reset between June and October of this year and $1 trillion in the next five years -- yes, we mean trillion with a "T" and a dozen zeroes. In some cases, borrower payments may double.
Real Change, Seattle’s homeless paper, reports that local homeowners are already feeling the sting of unexpected increases in their subprime mortgage payments.
Washington’s foreclosure rates are lower than national and regional averages. But we don’t want the record homeownership levels achieved in the last few years to result in record "home-losership."