Mortgage scams prey on desperate homeowners

Stephen Levins
Stephen Levins

By Paul Drewes - bio | email

PEARL CITY (KHNL) - Troubling financial times are taking a toll on Hawaii homeowners. Bad money moves are also forcing some residents from their homes.

It's bad enough that mountains of debt or piles of bills are forcing homeowners to fall behind on their mortgages. But there are also predators out there waiting to pounce on distressed homeowners when they need help the most.

As Hawaii's hot real estate market cools off, the number of island homes in foreclosure heats up.

"So far, our foreclosure numbers are up 132 percent over the last month and 169 percent over the past year. It's alarming numbers," said Duke Kimhan, with Realty Experts Hawaii.

Real estate agents aren't the only ones keeping an eye on foreclosures. Buyers are also taking a closer look, as some listings may be well under the appraised value.

"People in general feel a foreclosure is an opportunity to get a discount in property. In Hawaii it can be a 10-20 percent discount on the home," added Kimhan.

But along with the increase in foreclosed homes, there has also been an increase in the number of scams target those facing this financial crisis.

The Hawaii Office of Consumer Protection has filed a number of lawsuits and opened investigations against those taking advantage of struggling homeowners.

"People or companies will approach homeowners in distress and give them a song and dance about how they are going to save their property. A lot of times they are telling them what they want to hear but that is not what is going to happen," said Stephen Levins, the executive director of the Office of Consumer Protection.

If you are behind on your mortgage and having trouble making payments, you should only to go a bona fide credit counselor, one that won't cost thousands of dollars upfront to save your home.

And if you already have money invested in your home, you should never sign over your title to someone else to "rescue your mortgage."

"It never works. The system is set up to fail and to steal the equity from the homeowner," said Levins.

State lawmakers passed a bill this summer to try to prevent unscrupulous people from stealing home owner's equity instead of helping them. And even realtors are required to become a "distressed property consultant" if a seller is facing foreclosure.