| Most borrowers fail to realize that when trading their | | | | Flipping: This is an old favorite where a lender will |
| much beloved home for cash, lenders can foreclose | | | | agree to refinance an existing mortgage rather than |
| on their property in the case of default. Moreover, | | | | foreclosing. This is normally music to the ears of a |
| because of fly-by-night operators who are ready to | | | | weary borrower, but what is not disclosed are the |
| strip unsuspecting borrowers of their most prized | | | | exorbitant fees that are charged in refinancing which |
| asset, it is doubly necessary that borrowers be familiar | | | | only increase the debt burden of the borrower. |
| with some frauds that could be perpetrated on them. | | | | Packing: In such a case the lender adds or "pads" |
| Stripping: The most common type of home equity loan | | | | extra charges into the home equity loan in the shape |
| fraud is "stripping," wherein lenders give loans to | | | | of credit insurance, settlement charges and other |
| borrowers knowing fully that the borrower would be | | | | fringe charges which are of no real use to the |
| unable to repay them, thus paving the way for these | | | | borrower. The worst part is that such charges do little |
| scamsters to foreclose on your property and then sell | | | | benefit to the borrower but unnecessarily eat away at |
| it for a neat profit. The most common ruse for making | | | | the equity of a home. |
| borrowers accept such high-cost debt is disguising | | | | However, some simple steps, such as checking a |
| them as home repair loans. Many an unsuspecting | | | | lender's credentials, shopping around for better deals, |
| borrower who has a lot of home equity but also piles | | | | and consulting experts, can make the task of applying |
| of credit card debt can easily be taken for a ride. | | | | for a home equity loan that much easier. |