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For those struggling to make mortgage payments, there are a variety of assistance and counseling options from the government and from private organizations. However, homeowners should beware of any company promising “mortgage elimination.” The U.S. Secretary of the Treasury and the Office of the Comptroller of the Currency recognize a number of companies that try to suck in unsuspecting homeowners, defraud them of their savings or even the title of their home, and possibly even leave them homeless. Any company that advertises to help a homeowner eliminate a mortgage—for a significant fee—is almost certainly running a scam. Lender and Signature In some cases, the mortgage elimination company will present information to the effect that a mortgage company is profiting from the homeowner’s signature on the loan contract by selling it to secondary mortgage companies. The company will claim that this is fraudulent activity on the part of the lender (despite the fact that it is legal) and that it can assist the homeowner in eliminating the mortgage payment altogether, after the homeowner turns over a fee. The reality is that if fraud is occurring, the homeowner should consult a real estate attorney to see if legal action can be taken. In the unlikely event that the mortgage elimination company can actually do something, the homeowner will end up paying more money in fees to the company and may possibly risk losing his home. A real estate attorney will be able to address the issue effectively and, more importantly, legally. Currency Value Some mortgage elimination companies present the idea that a lender cannot legally offer the mortgage due to complex, and often confusing, reasons about the value of the U.S. currency and the money that the Federal Reserve must “create” (through printing) to keep the economy from failing. To put it simply, the mortgage elimination company will claim that because the value of the U.S. dollar is so debased through the Fed’s activities, the lender cannot require the homeowner to pay off the full loan amount, since the loan amount is based on dollars that have no value. The mortgage elimination company will purport to act on behalf of the homeowner by having the homeowner sign a power of attorney and possibly even sign his or her title over to the company, in addition to paying considerable up-front fees. By the time the homeowner realizes what's going on, the mortgage elimination company owns the property title and the homeowner may lose the property. Phantom Money from Banks Similar to the scam regarding currency value, one scam claims that the bank cannot issue a loan because the money does not actually exist. The homeowner will pay the mortgage elimination company an upfront fee (and in some cases, the homeowner will also be required to sign a power of attorney giving the title to the company), and the mortgage elimination company will provide the homeowner with a fraudulent loan release. The homeowner files this loan release form with the county, giving the impression that the homeowner has actually paid off the loan and allowing the homeowner to apply for a new loan. After applying for a new loan, the homeowner will continue the process again and again, until the homeowner is embroiled in multiple default loans. As far as the lenders are concerned, of course, the homeowner owes on the loans, but by this time the mortgage elimination company will have proven that it has no legal case, but it certainly has the homeowner’s fees and possibly even his title. About the Author Kristie Lorette is a freelance writer and marketing consultant that specializes in personal finance. She is also the editor of The Mortgage & Credit Diva, a blog devoted to mortgage and personal finance tips, tricks, and advice for consumers. You can read Kristie’s blog at www.mortgageandcreditdiva.blogspot.com or learn more about her writing and marketing services at www.studiokwriting.com.
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