Or at the very least behaved like one. You know what they say, if it looks like a duck, swims like a duck and quacks like a duck, it's likely a duck. I've covered some of these topics earlier but want to bring together some new factors that show that house prices are not sustainable and have been artificially inflated, along with some new charts to illustrate the point.

While I'm pretty good at math, I'm not a mathematician. What I can do is recognize and relate patterns. So there won't be any complex formulas as in a more advanced proof, but it should also be easier to understand.

I'm also going to try and debunk the myth that interest rates made house prices affordable, even though prices had grown so fast. Using conservative calculations a responsible buyer should use when deciding how much to spend on a house, it appears that in 2006 houses were selling for almost twice what the median household could afford.

This one isn't tied only to foreclosures assistance scams or other types of real estate scams. This is a tactic used by many unethical companies and individuals to help them commit their crimes.

Sometimes you wonder why so many people could fall into the trap. The reality is that people want to believe there's hope and they want to believe they can get help. The truth is there is hope and there is help, but you have to be careful if someone is asking for a lot up front and sounds too good to be true.

The reason these scams are so successful is because they gain your confidence. The 'con' in con man and con game is short for the word confidence.

The Times of Trenton has an article about the Mercer County Clerk's Office trying to alert individuals that they have received calls about a foreclosure assistance firm that allegedly is claiming to be "working with the county's clerk's office.".

The Mercer County Clerk's Office is alerting residents to phone solicitations being conducted by a company claiming to represent the county.

Clerk Paula Sollami Covello said yesterday that calls are being made from a company that identifies it self as American Modification Agency (AMA) of Uniondale, N.Y., and claims to be "working with the county clerk's office," offering to help renegotiate the terms of mort gages.

...

Covello said residents with trouble paying their mortgages should call either the Consumer Credit Counseling of Central NJ at (609) 586-2574 or Foreclosure Help at 1-888-995-4673 for free advice.

The best way to prevent falling for this type of scam is to write down the name of the company contacting you, write down the name of the party they claim to be affiliated with then hang up and tell them you'll get back to them. Lookup the numbers for the entity they claim to be affiliated with and call them and ask if the claim is true. Also make sure the company they claim affiliation with is the entity you think it is and that they are relevant.

I have seen junk mail come in with companies that sound official and look like they come from a government agency, when in fact they are from a private company.

Just remember, scammers are counting on you to not know what to do and to feel panicked. You need to act and you need to act quickly if you're having problems, but you shouldn't let that stop you from taking some time to be smart about it.

If your home has been foreclosed and the highest bid was in excess of the money needed to satisfy the foreclosing debt and any other junior liens, you are entitled to the difference. For instance, if the highest bid was $400,000 and the judgment for the first mortgage on the property was $300,000 and there was also $50,000 in principal left on a second mortgage secured by the home, the first mortgage company would get their money first then any left over would go to the junior lien holder's debt. The remaining $50,000 is considered "surplus funds".

With banks letting foreclosures go at auction for less than the judgment this is a rare occurrance in Bergen County foreclosure auctions but something you should be aware of if things change.

If you're in this situation, you may be contacted by a company or individual who will offer to get your surplus funds on your behalf. The problem is they charge exhorbitant fees to do this for you.

According to this consumer brief from the NJ Department of Consumer Affairs, for less than $100 you can claim the surpluss funds yourself and in most cases do not need an attorney.

The first thing you should do after an auction, is contact the Sheriff's department that conducted the sale and find out if there were any surplus funds. The number for the Bergen County Sheriff's Department is 201-646-3020. Follow the voice prompts and select the Civil Process department and then the prompt for the foreclosure sales division. If the prompts change or you are having problems you can speak to the operator and ask for the foreclosures department. I don't have any affiliation with the Sheriff's department but I followed the prompts to be able to give the correct info.

If you need assistance applying for your surplus funds, contact the NJ Superior Court Trust Fund Unit at 609-292-3937 or writing to the following address:

Jacob Kim pleaded guilty to conspiracy to commit bank fraud in federal court for his Palisades Park, NJ company's mortgage fraud that I have discussed previously. The Record has an article relating to his plea in which he faces 121 to 151 months in federal prison. He will be sentenced on November 6th.  I haven't been able to find any reports indicating if he has to pay any fines or what happens with the money he scammed.

Kim led a scheme between February 2004 and November 2005 in which he and other brokers used one home or business as collateral to obtain home equity and business loans from several different banks, without telling the banks about the other loans.

To bolster the loan applications, the company brokers submitted falsified tax returns and other documents that inflated the income of the applicants.

The scheme hinged in part on the lag time between when loans are approved and when they are publicly recorded in the county clerk’s office.

If you read my previous entry, I still haven't found out why the initial reports from a few years ago put the figure at $100 million while the current charges are for only $22.9 million.

Introduction

Individuals that find themselves delinquent in their mortgages and especially ones in which the foreclosure process has already started, will find they are not alone. Many individuals will be contacting them to try and help them out. Some of these offers will be from genuine people looking to help out troubled buyers as well as earn some cash for themselves, others will only be concerned about what goes in their pockets. You'll find legitimate businessmen, non profit and some government organizations as well as the property sharks which make troubled homeowners their prey.

I'll be covering some of the different mortgage scams over time to give you some more information to better protect yourself. There's one big problem though. Some of the techniques are similar to legitimate techniques that can help you if you're facing foreclosure. The key difference is, someone honestly helping you follows through on what they tell you, they don't cash out and walk away. By the time you realize you've been scammed it's usually too late. If you're going to use the services of someone to help you in your foreclosure proceedings, find someone that has a good reputation and check references. Foreclosure is a big deal and you don't want to just trust anyone with the fate of your home. You may feel a little uncomfortable about soliciting referrals and advice but you don't want to find out your worse off then you originally were because you were too embarrassed to make some calls and tell people what your situation is so you can get advice.

As with everything else on this site, this is not legal advice and you should double check local laws and regulations. Every situation is unique. This is just some information to get you started.

Equity Stripping

Your an honest working person who has been living in your home for some time. Life happens and you hit some hard times and the next thing you know you miss one mortage payment. Then another. You might be able to make the next but you don't know what to do. The stress and shock has clouded your mind and the next thing you know you receive notice to appear at a foreclosure hearing.

It happens to a lot of people. More so now than ever. Once the foreclosure notices get filed you'll start getting mail and calls from those offering to help. Your desperate to get help because you have been trying to avoid it hoping things work out so you talk to one of these companies and things so great.

They tell you you can live in your home either rent free or for a small monthly payment, they may even give you some cash up front to help you out with your other debt issues. They either outright tell you that you will have to sign over your home to another entity or they sneak in a quitclaim deed in the stack of paper work you'll have to sign. They tell you after they help you rebuild your credit that you will be able to get the home back. Sounds great doesn't it? The problem is you may find out one day the house is back in foreclosure and even more is owed then during your first foreclosure.

That's exactly what happened to Aleem Morris of Newark, NJ as recounted in this article in the Start Ledger availabe through NJ.com the scam artists in this case were Equitable Real Estate Solutions. Mr. Morris' story as well as that of other's can also be found in this New York Times article.

Morris said Equitable told him they would find someone with good credit and have that person put the house in their name. That person, known as a straw buyer, would make monthly mortgage payments in Morris' name. Morris would get $20,000 in cash to get out of debt and be allowed to stay in the house rent-free for a year with his grandfather, who had been in the Navy during World War II.

"It was like a dream come true," Morris said.

While mortgage payments were made, he said, Equitable promised to fix his credit and make him eligible to refinance in a year.

Morris said he got his money, but didn't realize that Equitable had duped him. He said they raised the appraisal of the house to $315,000 to make it look like it was worth more, then another company took $127,000 in equity out at closing, calling it a construction note.

When you first hear about it you might think about who would actually sign up for such a scam. The problem is it sounds reasonable. The company will take over the deed, refinance the home cashing out some equity which it will pay off your mortgage, give some to you and use the rest for some other investment that sounds like a great deal. It's sounds a bit odd but not completely implausible. Unfortunately, there isn't always always a profitable investment and they just take the money and run. People should really question it though. If they really had such a good investment why couldn't they just go to the bank and get a loan? This wouldn't have been hard for most companies during the credit boom.

If you sign the deed over to your home, there are no guarantees you will get it back, so always think twice before getting into any arrangement that requires you to do so. A good attorney will be worth the money to prevent you from getting into such trouble. Also keep in mind that some of these mortgage and foreclosure scams don't start off ripping people off. They keep up with the mortgage payments, then either because they hit hard times themselves or they were just keeping up appearances they stop making payments.

Straw Buyers

I mentioned the concept of straw buyers in relation to equity stripping, so I want to add some more information. Straw buyers are used in different types of mortgage and foreclosure scams. In some cases the straw buyers might just be victims themselves. These companies may find individuals with good credit and use their credit to secure loans for these homes that were recently deeded to them. They use the straw buyers' good credit to secure mortgages or for refinancing existing loans. These buyers may fall for the same hope of getting a bit of money and putting their good FICO scores to use without lifting a finger. In some cases the straw buyers were the scammers, in others, the straw buyers were scammed too and stuck holding a home with liens they couldn't afford to pay, no equity left in the home and the angry former homeowner to deal with.

This is a serious situation that requires action.  All too often we let situations like these overwhelm us and we sometimes ignore them hoping things work out.  That is usually not the best plan of action in these situations, especially when facing foreclosure.  You need to take action and start dealing with what's going on if you want this to go as well for you as possible.

It doesn't matter how you got here.  Whether you were laid off, had an injury or somehow were suckered into a bad loan by a loan officer that didn't give you all the details, you're here and you have to deal with it. The sooner you act, the better off you will be.  If you are having problems paying your mortgage and haven't missed any payments yet, you might want to contact your lender and see if you can do something before foreclosure becomes a necessary remedy for them.

NJ 211 is a service provided by the United Ways of New Jersey that connects residents with community services.  You can try contacting them and see if they can lead you to someone that is able to help you.

You also need to be careful of scammers.  While some people may approach you with legitimate offers to purchase your home, be weary of some "Rescue" plans.  The Better Business Bureau has an article on "Foreclosure 'Rescue' Scams".  That you should read if you're in this situation. The article advices you to consider the following options:

• Talk to your lender. Ask about how to restructure your loan payment or refinance. Some foreclosure "rescuers" will offer to "negotiate" with your lender or lawyer. Know that such an offer is likely to involve a significant fee. If you are hesitant to talk to your lender yourself, engage the assistance of a trusted family member.
• If that proves to be unfeasible, try selling the house on your own to pay off the lender. Signing over a deed in no way releases you from your mortgage responsibilities!
• Some schemers will offer to complete paperwork for you, or ask you to sign a stack of documents, supposedly to secure a new mortgage. Victims have later learned that they signed a quit-claim deed to their home.
• Beware the personal approach. Some less-than-ethical businesses will stuff a handwritten note in your front door or mailbox that implies that "help" is available from someone you know or who has your interests in mind. Foreclosure scam artists know exactly what neighborhoods to blanket with their offers.
• If a foreclosure "rescuer" instructs you not to contact your mortgage company or your attorney, beware. Your mortgage company is the very business that you should be in touch with! Furthermore, why would you agree to cease contact with your attorney when dealing with complicated financial matters that involve perhaps your biggest investment, your home?
• You should never sign a contract under pressure and never sign away ownership of your property. Ask a trusted family member, your attorney or a financial professional to review any paperwork you may be asked to sign.
• Before signing any deals with a potential buyer, contact your BBB to request a report on the company and check with your state Attorney General and state Real Estate Commission.

If you know of a reputable financial adviser or attorney you should contact them for advice as well.

In any case, right now you need to get educated on what's going on because you do have options.  You may not like all the options but it is better then having the foreclosure on your credit report, or losing your house to someone that claimed they wanted to help you.  Below are some books you may want to look at that can bring you up to speed.  You can try searching the Bergen County Library System to see if it is available locally.  Click on the links bellow for reviews of the books and more information and to order if you prefer to have your own copy.