Another dangerous home equity loan scam can surface if you have trouble paying your mortgage and are at risk of foreclosure. Another “lender” may ask you to deed the property to him as a temporary measure to avoid foreclosure, and he will refinance the loan. You are desperate and agree.

The property now belongs to the lender and he can treat it as his own, borrowing against it or even selling it. Because you do not own the home any more, your mortgage payments will be treated as rent and if you fail to make payments, you could be evicted from your home.

Never deed your property to anyone else. If you are having trouble meeting your mortgage payments, seek financial counseling from an accredited source.

One way the lender can add extra costs to your loan is by adding “credit insurance”. Often these are charges for benefits and insurance you didn’t ask for. The lender may insist that these come with the loan or that the loan would have to be re-written if you refuse them and may not be approved. Usually, the lender hopes you do not notice these extra charges. If you agree to pay for the insurance, you may be paying a lot more for your loan than you bargained for.

Don’t agree to a loan that includes credit insurance or extra products you don’t want. If credit insurance is a condition of the loan, shop around for the best rates.