Beware:
"Eliminate Your
Mortgage in as little as 7 months!"
The FBI, Federal Reserve System and
Office of the Controller of Currency have alerted the banking, lending
and mortgage industries to a scam commonly called a "Mortgage
Elimination Program". These programs promise to eliminate mortgage
debt in as little as 7 months.
Those organizing and perpetrating these
scams are doing so by using convincing-looking but false financial
documents and making outrageous claims (such as questioning the
legitimacy of the Federal Reserve System or the validity of U.S.
Currency). Clients must pay upfront, usually large sums of money -
upward of $2,500 or more.
How They Operate...
These companies work through brokers and
Internet popups to find financially distressed homeowners and exploit
their willingness to give personal and financial information by
promising them complete elimination of their mortgage, but allowing the
homeowner to keep the property free-and-clear of any mortgage.
The next step is to sell the theory that
"mortgage elimination" is perfectly legal and it works. These
scammers have concocted all sorts of creative arguments to prove the
legitimacy of "mortgage elimination".
According to one argument, the
banks don't really loan their money so it has no real value, it's just
paper and ink. As the borrower, you generated the money,
because the government had to print more money to cover your loan.
In essence the bank made money off of your signature so the mortgage
note is meaningless and you don't owe the money and in fact the bank
owes you.
They then toss in a few extras to make it
sound more convincing, often quoting politicians and Federal Reserve
documents out of context to prove their point. They are careful to
point out that banks, mortgage companies and the FBI will tell you that
"mortgage elimination" is a scam because the establishment is so afraid
that if more people knew the truth, the banks would no longer be able to
cheat people out of their money.
Buying into their
Argument...
When an unsuspecting homeowner buys into
the argument, they are typically required to send thousands of dollars
to the "mortgage eliminator" who will guide them through the process and
represent them in court. Once the money is exchanged, they are
never heard from again, except...
Other "mortgage eliminators" take it even
further. They advise the homeowner to march down to the clerk's office
and file a form stating that the original loan has been released.
This obviously doesn't negate the mortgage which remains in place and
the money is still owed but if the county clerk records the discharge,
the deed makes it appear as though the homeowner owns the property
free-and-clear.
Now that the homeowner appears to own the
home free and clear, the homeowner applies for one or more additional
loans on the property, with the generous assistance of the "mortgage
eliminator", of course. When the loan or loans are approved, the
mortgage eliminator and the homeowner split the proceeds, often with the
mortgage eliminator walking away with the lion's share.
Eventually, the county clerk, the bank
that made the original loan, or the banks that made the subsequent loans
spot the scam and confront the homeowner. By this time, the "mortgage
eliminator" is long gone, leaving the homeowner with one or more unpaid
mortgages, a legal mess, and possible criminal charges for conspiracy to
commit fraud.
"Mortgage elimination" schemes are
designed to hook susceptible homeowners, and they resonate most with the
most vulnerable of them - homeowners who are facing bankruptcy or
foreclosure. What these homeowners should do when facing foreclosure is
to immediately contact the lender and ask what options are available.
The lender may be willing to restructure the payments to make them more
affordable or suggest other legitimate solutions to the problem. In
almost ninety percent of foreclosures, homeowners can benefit most by
selling the property and paying off the balance of the mortgage in order
to salvage their credit and start fresh.
Instead, distressed homeowners commonly
look for a more tempting solution and end up falling for deals that
really are too good to be true. They pay money they already cannot
afford to a con artist, they bury themselves deeper in debt, and they
create conditions that make it even more likely they will lose their
homes in foreclosure.
-----REMEMBER if sounds too good
to be true (getting your home free-and-clear without paying for it
sounds pretty good) it probably isn't.
In September 2005, a federal
grand jury in Oakland, California indicted promoters of a "mortgage
elimination" scheme on 46 counts of mail fraud, bank fraud and
conspiracy to commit fraud. If convicted, these individuals face
up to life in prison and millions of dollars in fines.
UPDATE: A
federal grand jury has issued a 68 count indictment against the same
promoters in February 2006.
All lenders on this site have signed a
Residential Mortgage Advocate™ (RMA) commitment to be totally upfront about
their fees, rates and items they will need from you.
Been Scammed or Dealt with an Unethical Lender?
Contact Us or Report it to
Your State authorities.
Check our
