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Avoiding Home Equity ScamsYou could lose your home and your money if you borrow from unscrupulous lenders who offer you a high-cost loan based on the equity you have in your home. Certain lenders target homeowners who are elderly or who have low incomes or credit problems—and then try to take advantage of them by using deceptive practices. The Federal Trade Commission cautions all homeowners to be on the lookout for: Equity Stripping
The lender gives you a loan, based on the equity in your home, not on your ability to repay based on your income. If you can’t make the payments, you could end up losing your home. Loan Flipping
The lender encourages you to repeatedly refinance the loan and often, to borrow more money. Each time you refinance, you pay additional fees and interest points. That only serves to increase your debt. Credit Insurance Packing
The lender adds credit insurance to your loan, which you may not need.
Bait and Switch
The lender offers one set of loan terms when you apply, then pressures you to accept higher charges when you sign to complete the transaction. Deceptive Loan Servicing
The lender doesn’t provide you with accurate or complete account statements and payoff figures. That makes it almost impossible for you to determine how much you have paid or how much you owe. You may pay more than you owe.
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