Mortgage Cancellation

Long time fan first time poster…

There’s a new fad sweeping through my office called mortage cancellation. A whole group of people are convinced that it’s the greatest thing since the invention of the wheel.


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?

Welcome to the boards.

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.

The scariest line in this whole thing:

Be very, very wary.

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.).

A fool and his money are soon parted.

If you think you can stiff the bank out of the money they lent you then you deserve to be stiffed out of $1995.

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.

See $$$ Own Your Home Debt Free! $$$

You’ll have the last laugh. Just make sure to follow up.

I agree with sailor. Your cow-orkers are likely to get taken to the cleaners on this one.

I wouldn’t have thought that “Pay me 2 grand and I’ll help you steal that guy’s money” would be an especially productive angle to try to work. Shows how much I know.

Let us know if/when anything further develops.

Sounds a bit like the Nigerian scam has been Midwesternized.

Can you follow up and let us know what the outcome was for your co-workers? I’m really curious to see how this comes out.

I can save Lefty’s coworkers some money - just send me a $1,000.

And they won’t have to wait 45 days to know the final result. I promise to cash the check the day I get it.

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.

Here’s another favorite mortgage con the Cash out Re-finance Scam -

LeftHand if I were you I’d watch my back around these people.

Is it me or have they proven that they’re, well, thieves?

I checked out that web site – what a crock.

When I signed a mortgage and promissory note, the documents were very clear that the bank had the right to assign them. I imagine that most mortgages and notes have this feature.

When it was signed and delivered to the bank at the closing.

It’s exactly what I agreed to. The bank cut a large check to the seller of the house; the seller gave me a deed; and I agreed to pay the bank (or its assigns) monthly for 30 years.

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… :wink:

What happened here?

Looks like we’re still waiting for him to post what he found.