The "Home Improvement" Scam
The Home Improvement Loan scam is a common form of Home Equity Theft. The mechanics involved are quite similar to the "Deed Theft" or "Title Conversion" scam discussed in an earlier post.
You may be approached by a home improvement contractor or a "salesman" working for a contractor (similar to the way a "foreclosure assistance counselor" looking to steal the ownership of your home might approach you) who offers to install a new roof, remodel your kitchen or bathrooms, replace your air conditioner / boiler, or perform other home repairs at a price that sounds reasonable. (He may contact you by phone, direct mail, or he may personally show up to your home and knock on your front door.)
You tell him you're interested, but can't afford it. He tells you it's no problem-he can arrange financing through a lender he knows. You finally agree to have the work done on your home.
At some point, you are asked to sign a lot of papers. It may be before the work starts, or it could be after the works starts (and after the contractor has already made a big mess in your home). The papers may be blank or the salesman or contractor may rush you to sign before you have time to read what you've been given. If the work has already started, the contractor may threaten to leave the work on your home unfinished (and leave you with a big mess in your home) if you don't sign. You sign the papers.
Only later do you realize that the papers you signed are a mortgage / home equity loan. The salesman may have grossly overcharged you for the home improvement work. The interest rate, points and fees seem very high. To make matters worse, the work on your home isn't done right, hasn't been completed, or possibly no work at all has been done. The contractor, who may have been paid by the lender, has little interest in completing the work to your satisfaction and you're left paying off the mortgage / home equity loan for years to come.
You may be approached by a home improvement contractor or a "salesman" working for a contractor (similar to the way a "foreclosure assistance counselor" looking to steal the ownership of your home might approach you) who offers to install a new roof, remodel your kitchen or bathrooms, replace your air conditioner / boiler, or perform other home repairs at a price that sounds reasonable. (He may contact you by phone, direct mail, or he may personally show up to your home and knock on your front door.)
You tell him you're interested, but can't afford it. He tells you it's no problem-he can arrange financing through a lender he knows. You finally agree to have the work done on your home.
At some point, you are asked to sign a lot of papers. It may be before the work starts, or it could be after the works starts (and after the contractor has already made a big mess in your home). The papers may be blank or the salesman or contractor may rush you to sign before you have time to read what you've been given. If the work has already started, the contractor may threaten to leave the work on your home unfinished (and leave you with a big mess in your home) if you don't sign. You sign the papers.
Only later do you realize that the papers you signed are a mortgage / home equity loan. The salesman may have grossly overcharged you for the home improvement work. The interest rate, points and fees seem very high. To make matters worse, the work on your home isn't done right, hasn't been completed, or possibly no work at all has been done. The contractor, who may have been paid by the lender, has little interest in completing the work to your satisfaction and you're left paying off the mortgage / home equity loan for years to come.
Related Links Involving Home Improvement Scams & Unscrupulous Contractors:
- Home Equity Theft Through Contractors Still a Problem
- Legal Eagles on Lookout for Fraudulent Contractors
- States Try to Crack Down on Unlicensed Contractors
- 17 Charged In Home Improvement Fraud In Nassau County
- Pa. Attorney General Home Improvement Consumer Protection Q & A Sheet
- Contractor Stiffs Subs; Subs File Liens on Customers' Homes
revised 11-23-06
posted by Home Equity Theft Reporter at 9:25 PM
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