Avoid These Debt Consolidation Texas Schemes

The state of Texas has been ravaged by rampant foreclosures since amending its constitution in 1998 to allow mortgage companies to sell home equity loans. The ongoing foreclosure proceedings in the state have been so extreme, that Attorney General Greg Abbott declared Texas, "a state in a foreclosure crisis."

If you're not cautious, a subprime debt consolidation lending scheme can mislead you into a loan with hidden terms and exorbitant fees that can force you to default on mortgage payments, and ultimately lose your home. Having awareness of the following debt consolidation Texas schemes can help you avoid being a victim of such schemes:

One of the most common debt consolidation Texas schemes is "loan flipping." The predatory lending tactic can induce the borrower to repeatedly refinance a mortgage loan to gain a lower rate. Yet, each time that the home is refinanced, it can cause the borrower to pay huge fees. The end result can lead to paying steep interest charges and prepayment-penalty fees.

In the popular scheme of "credit insurance packing", at the closing of a debt consolidation loan, an unscrupulous lender will try to add to the loan additional charges for credit insurance or other insurance products that a borrower never needed or requested.

Mortgage brokers are responsible for a plethora of other mortgage servicing schemes, such as approving a borrower for loan a loan and then sending a letter to the borrower stating that the mortgage payment will be higher than the amount originally quoted, or stating that, because the borrower failed to maintain required property insurance, more costly insurance is required.

Altogether, the best way to avoid being victimized by a debt consolidation Texas scheme is consumer awareness. In lieu of taking out a debt consolidation loan to consolidate credit card debt, negotiating your debt to reach a debt settlement can make more sense.

To participate in a debt settlement program no homeownership or credit is required. Settling your debt can produce a greater savings. Additionally, unlike a debt consolidation loan, debt settlement doesn't place a borrower's property at the risk of foreclosure.

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