FHA Book

Refinancers Beware!

Here is more proof that borrowers facing foreclosures are in desperate need of a safe and reliable way to refinance their homes. This article in the Business Section of the New York Times highlights a new danger facing consumers headed for foreclosure:

The schemes take various forms and often involve promises to distressed homeowners of cash upfront, free monthly rent and a chance to retain their houses in the long run. But in the process, someone else takes over the deed, borrows as much as possible against the value of the house and pockets the cash. And, almost always, the homeowners still end up losing their homes.

There are no nationwide numbers on this common fraud, known as equity stripping, but it has turned up in almost every state. Seven states have passed laws to try to stop it. Still, with foreclosure rates rising rapidly, it will be a growing problem, consumer advocates say.

Those looking to refinance need to get all the facts before making any sort of decisions and always remember that things that sound too good to be true probably are.