Years after the official end of the recession, many New Jersey residents are still facing the threat of losing their homes. Some homeowners became desperate enough between 2006 and 2009 to believe a company’s promises to stop foreclosure. Recently, the architects of what federal officials believe was a lease buyback scam were arrested, which may leave many homeowners wondering what happens next.
The alleged scam involved homeowners signing over the equity in their homes to the company, which was supposed to be kept in an escrow account used to make payments on a new mortgage. The home would remain in the owner’s name but would essentially be leased from the “investors” who supposedly provided the funds to refinance the home. The owner would then be eligible to “repurchase” the home the following year.
Agents with the United States Postal Inspection Service and the Federal Bureau of Investigation say that, instead of putting money into an escrow account, the defendants split the proceeds. Since few to no payments were being made on the mortgages, they went into default. This means that homeowners who participated in the alleged program could face foreclosure.
At a time when financial resources are at a premium, the lure of being able to stop foreclosure can be strong. However, there are other legitimate ways to do it. Filing for bankruptcy stops any collection actions and gives New Jersey homeowners the chance to determine whether they will be able to keep their homes. In addition, other debts may be discharged, freeing up additional income that could be put toward mortgage payments and give the family at least some breathing room financially.
Source: nj.com, “6 N.J. residents indicted in multi-million dollar mortgage scheme“, Michelle Caffrey, Oct. 1, 2014