Essentially through some quasi-legal voodoo you can buy a house with a mortgage of 250k go through this process and have the mortgage annulled, ending up with a 250k house that you completely own, while someone other than you ends up taking a 250K loss.
It obviously falls into the “sounds to good to be true probably is category.” But the mere fact that someone would claim to be able to do something so outrageous is unfathomable. My curiousity raging I came to the fountainhead of all truth. Can somebody help me out? What kind of scam is this?
I am not familiar with this particular scam, but the one thing that jumps out at me from reading their explanations is the notion that the banks are creating value from nothing (or from your mortgage agreement).
The only reason the mortgage agreement has any value is that it represents a promise (by you) to pay the amount of the loan, plus interest. That’s the reason they can sell it to other institutions, etc., because it has a future value.
If you default on your loan, whoever is holding it at the time has lost money.
I can’t imagine any of their “legal” tactics holding up under scrutiny.
In short, though, here’s what they seem to say is happening:
a) you buy your house w/ a mortgage
b) you pay this co. $1995.
c) this co. buys out your mortgage from the bank (“In exchange for your debt we offer your lender a new asset of equal value.”)
d) you pay this co. an addl. 15% of the value of your house WITHIN 45 DAYS (delays would presumably result in foreclosure, and they’ll own your home outright)
e) you take out a home equity loan to pay back the 15% you owe the company. For some reason, they advise you take out 80% of the home’s value, and say “Note: Assistance with refinancing is available.” My guess is that this co. will offer to be your lenders, so instead of paying a bank, you’ll be paying this company. Probably at worse rates than for a mortgage, too.
I wouldn’t be surprised if there were some sort of timing shenanigans in there, too (like how soon the equity in the house is yours, what happens if the paperwork is “accidentally” delayed by this co., etc.).
I couldn’t agree more and that’s what I’ve been trying to tell my co-workers, but several of them a reasonably far along in the process i.e. they’ve already paid the $2000 or however much it is. Which is one of the interesting things about this is that there is more than one “company” (band of crooks) offering this service.
What is particularly humorous is when I talk about the collapse of the US real estate market (conceivably dominoing into the entire US ecomony and then the world) if this actually was legitimate and widespread, and they just give me this look like how could you doubt.:rolleyes: Or you just haven’t researched it enough…
I guess what also surprises me is that there isn’t more to be found about it on the web. Which leads me to believe that’s it’s a scam which is still in it’s infancy…
One version of the mortgage cancellation scam(s) seem to be predicated on the notion that there is some built in obscure legal or contractural flaw in many standard bank mortgage contracts that will allow a legal challenge to, and potential nullification of, the mortgage if the charge of “fraud” is pressed using certain mysterious legal techniques that will cause the bank attorneys to throw their hands up in the air. There might, in fact, be a few banks that have done this if the remaining value of the mortgage was not worth the legal hassle, but to bet on this as a guaranteed procedure is retarded, and to pay anyone big dollars in advance, or throught the process, to pursue this for you borders on criminal stupidity.
What a joke. All that they are ultimately saying is that they will pay out your mortgage loan for $2000 plus 15% and of course what they then fail to mention is that you will owe them, instead of the bank. So you will just have exchanged one lender for another, and paid a great whack to them in the process.
They suggest that you then refinance using the equity you now have in your home. I suspect that they suggest this because it is shortly after you do so that they give you the bad news: you have no mortgage, but you owe the scammers the money and they want it: so you use the refinance monies to pay them. And of course they offer to arrange the equity loan themselves: in other words they hope that real suckers will end up with a mortgage owed to them, rather than to the original bank, and that they will have collected $2000 and 15% along the way.
I guess what led me to post here in the first place was that despite my best efforts to ferret out the truth of this matter myself I came up with nothing conclusive. No web page that said “this is a classic pyramid scheme” or “this is a scam that ends up with the participant holding a 18 APR mortgage”.
Which leads me to think that we’re seeing a nascant scam. Something that 20 years from now people will talk about mortgage cancellation they same way they talk about e-mails from Nigera, but which right now hasn’t reached the critical mass necessary for anyone to take it seriously.
In any event I will be following this very closely and I will certainly post again when it comes to it’s expensive conclusion…