There is a sad tale developing in America's foreclosure crisis, desperate homeowners who owe small amounts of cash for taxes or who are only slightly delinquent on their mortgage are being mauled by foreclosure "wolves." These foreclosure wolves are seeking out desperate homeowners facing foreclosure and saddling them with "commercial" loans so that they can get around state regulations and prevent homeowners from enjoying the protections provided for mortgage borrowers.
Here's what's happening:
- Mortgages for residential properties are still not as available as they were before the recession. But despite this fact, homeowners facing foreclosure still need to be able to tap equity in case of an emergency or if they want to finance a mortgage that has an unaffordable interest rate.
- When homeowners facing foreclosure are unable get the loans they need to correct their situation, they become desperate and often turn to foreclosure "wolves" who offer what's called hard money loans. These loans have high interest rates and are designed to rob the homeowner of their property.
- Desperate homeowners don't read paperwork and are convincing themselves that they can pay any interest rate, even interest rates as high as 90 percent. Yes, there are hard money loans out there for homeowners facing foreclosure that charge 90 percent interest and require the homeowner to repay the loan in as little as 60 days or face foreclosure.
- How do the foreclosure wolves get away with this dirty style of business? They are basically issuing residential mortgages to desperate homeowners and labeling the loans commercial. On a commercial loan there are no interest rate caps and no state regulation. The homeowner is also often forced to sign a quit claim deed which is basically signing over the property to the foreclosure wolf.
Homeowners facing foreclosure should NEVER sign any paperwork without reading it first and having an experienced attorney read it. They should also NEVER sign any quit claim deed even if the person asking them to sign it claims that it will save their home from foreclosure. If you are desperate to stop foreclosure and are unable to get a loan through traditional route, contact a bankruptcy attorney so that you can find out how bankruptcy can stop foreclosure and help you get on your feet again.