Subprime Lending Crisis Sheds Light On Mortgage Scams
Gabriellee Cunningham fell behind on the mortgage on her modest suburban Miami home and was mired in debt by the time she was approached by a door-to-door “mortgage lender” who promised to help her.
Nine months later, her $89,000 Florida mortgage ballooned into a $234,000 home loan, her monthly payments have doubled, and she faces foreclosure on a property she no longer owns.
Housing officials call Cunningham the victim of one of the worst cases of predatory lending they’ve ever seen and believe, as the U.S. bad credit mortgage crisis grows, the rising tide of scams in which homeowners are being cheated is just beginning.
“I know I did something stupid but I am going to fight these people ’til my last breath because they are trying to rob me,” said Cunningham.
Consumer advocates have seen a surge in “foreclosure rescue” and “equity stripping” scams in recent months as the subprime lending crisis developed.
Lenders launched foreclosure actions against more than one in every 200 mortgage borrowers in the fourth quarter of 2006 as home equity markets continue to get hammered.
That figure was the highest recorded total in history.
Subprime adjustable-rate mortgage delinquencies jumped to nearly 14.5 percent in the quarter. Florida is among the states hardest hit by the crisis, which some advocates believe is in its infancy.
Florida ranks second to California in percentage of bad credit home loans, granted to people with poor credit histories, many of whom are finding they can’t make their payments.
By some estimates, up to 30 percent of loans in Miami, a metropolitan area with large poor and immigrant populations, are subprime.
The non-profit National Consumer Law Center said no one tracks the number of people trapped by mortgage scams but it agrees with the views of lawyers and consumer agencies that mortgage scams, which routinely target the poor and minorities, have proliferated with rising property values.
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