The number of Americans who are finding their homes in foreclosure, is rising at a staggering rate... up 24 percent between July and August of this year alone! Ohio, Indiana, and Kentucky are all among the 25 states with the highest foreclosure rates.
And some of those families may be losing their homes as the result of mortgage fraud. There are two ways that mortgage fraud happens.
Sometimes a family is giving an inflated home appraisal, which means they're told their home is worth more than it really is.
Other times, the family is told their interest rate will be fixed, when it's really adjustable.
Tom and Julie Freeman appear to be the victims of both types of deceit. They had lived in their Independence house for two years when they went to the Centex Home Equity Company to refinance.
JULIE FREEMAN: "He was going to pay off the existing loan. He was giving us the money to pay off our car loan which was about 12 thousand dollars and enough to pay off all of our credit card debt. So it sounded wonderful to us."
The Freemans say they were told their 7.9 percent interest rate was fixed when actually it was an adjustable rate mortgage-- which quickly jumped so high they couldn't keep with the payments.
FREEMAN: "They filed for foreclosure. THEY WANT YOUR HOUSE? They want our house."
Problem two-- the home appraisal was allegedly changed by someone at the mortgage company-- inflating its value from 106 to 155-thousand dollars according to appraiser Paul Steffen.
PAUL STEFFEN: "They used the same date that I used in the original appraisal. They just changed the sale prices to inflate the adjusted comparable sale price. And then consequently the final estimate of value."
ERIC DETERS:"We don't know yet who. We sent them discovery requests but we don't know who's done it yet. We don't know who change it in the company."
The mortgage company attorneys are now proposing to resolve the lawsuit by offering to return the Freemans to their original lower mortgage rate and fix it for 30 years.
But neither the Freemans nor Deters want to do that because they say they fear there are others who are also victims.
DETERS: "If you've been foreclosed upon by one of these companies in Greater Cincinnati you might want to investigate to see what actually happened to you to see if this type of thing happened again."
Centex Home Equity has been acquired by Nationstar Mortgage LLC. I called their attorney, but was told they have a no comment policy.
Attorney Deters says he's heard of others who have been foreclosed upon by this company and is investigating to see if they too received inflated appraisals.
To protect yourself, make sure you ask for a truth in lending statement from your lender as soon as you make your application. It'll tell you the exact terms of the rates.
Ask for and get a copy of the appraisal, and if the appraised value of your home seems much more than you expected, contact the appraiser to discuss the difference.
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