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How to recognize a foreclosure scam

When Alberta homeowners experience tough financial times, they may fear losing their homes. Unfortunately, foreclosure threats may cause people to grab at straws without realising that any offer that sounds too good probably is too good to be true. Although there are remedies to such situations, desperation to hold onto the property may make a homeowner susceptible to swindles. Anybody who tries to rush a private purchase may have ulterior motives.

One method scammers use is called equity skimming. A person may offer to pay a homeowner's mortgage if the deed is signed over. The homeowner must then move out of the house, the scammer collects rent and never pays the mortgage. Signing over the deed does not remove responsibility for the mortgage payments, and foreclosure against the homeowner will follow.

Another method is to offer the property owner a loan with lower monthly payments for a specific term. After the duration of the term, the entire outstanding amount becomes payable. The catch is that the lower monthly payments might have covered only the interest, leaving the balloon payment out of the homeowner's reach. Foreclosure will follow, and the lender will get the property.

A more appropriate remedy for an Alberta homeowner facing foreclosure may be to seek the advice of an experienced real estate lawyer. Signing over a property deed, or signing any documents related to the sale of residential real estate, are typically best done under the guidance of skilled legal counsel. A lawyer can assess the severity of the financial situation before explaining the possible remedies that might prevent foreclosure.

Source: FindLaw, "Watch Out for Foreclosure Scams", Accessed on Feb. 9, 2017

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