If you are considering refinancing your home in order to avoid foreclosure, be cautious. A common refinance mortgage scam uses adverting with words like “rescue loan” or “rescue refinance.”
To avoid this mortgage scam, you MUST read your loan papers carefully. If you do not trust yourself to be able to sort out the paperwork, hire a lawyer or ask a trusted friend to help you with understanding the agreement.
Even in legitimate loan transactions, the amount of paperwork is astounding. So it is easy to miss hidden clauses that scammers slip in on you.
Be on guard for something called a “deed transfer clause.” This part of the agreement actually transfers the title of the home to the scammer. It may mention a “trust,” or a “land trust.” In any case, you are essentially giving up all ownership rights to the home, but you are still on the hook for the mortgage.
Another piece of paperwork that con artists will try to sneak into the transaction is a form called a “quit claim deed” or “quitclaim deed.” Sometimes it is mispronounced, “quick claim deed.” This document is a sworn statement declaring that you surrender any rights of ownership to your home.
Quit Claim Deeds are used in cases such as a divorce. When the party that kept the house wishes to sell, the ex-spouse signs a Quit Claim Deed. This assures all parties that the ex-spouse has terminated all ownership interest in the home. It renders a clear title for the new owner.
So Quit Claim Deeds are legal and useful in many cases, but do not sign one unless you wish to terminate, or “quit,” all legal “claim” to your home.