Hardship Letter: This is a type of fraud that swindles homeowners out of their equity, usually when they are in default on their mortgages or their real estate taxes. A person who calls himself a buyer stops at your door and convinces you to sell your property to him (usually for less than market value) and promises to pay off your mortgage. The buyer is likely to advise you to transfer the deed of the property to him, move out of the house and stop interacting with your mortgage lender. The buyer will then rent out your property to a third party and start collecting monthly rental payments. Unfortunately, the buyer will make no effort to pay the mortgage payments, thereby allowing the lender to foreclose on your property. The skimming aspect comes into effect if you have a reasonable amount of equity in your property; the scammer will flip the property to pay off the debt and then make a profit by keeping the equity. Remember: Signing a deed over to a third party does not relieve you from your mortgage obligations.
Other times it involves people who call themselves investors who see a huge pile of equity in a property that is headed toward foreclosure. They approach the owner and tell them that that by selling their residence to “the investor”, it would wipe the slate clean and “the investor” would take over all of the homeowners’ property-related debts and obligations. The homeowner complies and loses all their equity in their property.
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Hardship Letters
