At present, the housing market is slowly recovering and the overall economy is sluggish. Such a situation is great for mortgage scams as desperate home-owners become easy preys to the scammers. Every year, there are thousands of home-owners who are scammed. The home-owners fall prey to them when they look out for loan options through the Internet. Thus, one should be careful while taking out a loan so that he or she could avoid such scams.
Top 5 mortgage scams
If you wish to avoid mortgage scams, you will have to know about the common mortgage scams that people fall prey to. Let's take a look at the scams:
1. Signing away the deed: This is a common type of mortgage scam. Scammers pose as mortgage professionals and promise to provide low interest rates, modification, or refinance at low rates, etc. and lure the home-owners into signing away their property deeds. If you do not bother to read the documents carefully, you will never be able to know about the scam unless it's quite late. Alarm bells should ring if someone promises you the whole world easily! So, make sure that you read through the documents and then sign on the dotted lines.
2. Loan modification upfront fee scams: Experts always warn home buyers about not paying upfront fees while modifying the loan. Now that most homeowners know this fact, the scammers are presently trying to convince the borrowers into paying money by saying that they are charging the money for doc preparation. Many a times, they will even provide you with a 30-day money back guarantee. Also, many a times, they claim money in the name of government programs. As people are less apprehensive about government programs, they pay the upfront fees.
3. Mortgage sale scams: In the mortgage market, it is quite common that mortgage lenders sell off their mortgages to other companies. However, the scam artists are quite clever and take advantage of this situation. They come up with fake companies and contact you saying that your mortgage has been sold to them. As a result, you make payments to them and fail to realise that your actual mortgage has gone into default. So, when someone contacts you saying that they are your new lenders and you will have to make the payments to them, then do not blindly trust them. Contact your original lender and clarify the matter. Also, the lenders formally inform the borrower that their mortgage has been sold off through a “Good Bye” letter and the new loan servicer welcomes you through a “Welcome Letter”.
4. Avoid reverse mortgage scams: If you have elderly people at home who own properties, then remember that they are easy targets of the scammers. The scammers take help of sleek marketing campaigns in order to convince the seniors to take out reverse mortgages. The scammers may even offer inflated appraisals to seniors so that they are tempted to take out a reverse mortgage. Once such a thing happens, they steal the money and the lender and the reverse mortgage borrower is left with the loan and a financial mess.
5. Buy back agreement scams: Due to the public records, people can now easily know which property is going through foreclosure. Scammers take advantage of the situation the most. From the records, they can easily find the distressed borrowers and convince them to sign a quitclaim deed transferring the property to them. The scammers claim that this property transfer will be temporary. They may tell you that you will be able to eventually get back the property. However, in reality, the scammer will collect the rent from you but not pay the lender. Eventually, the lender will throw you out of the property.
Now, that you know about the common mortgage scams, it will help you save yourself from them.