With record-breaking individuals taking home loans these days, it’s no surprise that scam artists are developing new ways to separate borrowers from their money.
Mortgage frauds are on the rise and are usually targeted at people with high debts, bad credit or financial relief. These scams cost a lot – in fact, they can damage your home. Protect yourself from con artists who have a small background of common mortgage scams:
Small hand gesture
There are papers that accidentally signed the title from the homeowner because they were confused with the paperwork. As with any decision regarding your finances, get everything in writing and insist on reading the documents carefully before signing. Ask questions and make sure you understand the answers.
Make sure you never sign paperwork with blank spaces or allow someone to rush you through the process.
High Pride Home-Buying Seminars
You’ve seen ads for those home buying seminars or events in the newspaper (and on bus benches) for people with low credit. If you are considering such services, first look at their fee structure and make sure you don’t buy into the scam.
If you need to pay a large fee in advance, the service is invalid. Please contact the Better Business Bureau before taking action.
Let’s say you’re struggling with mortgage payments or foreclosures. Once a business or individual offers to buy and sell the property, you can re-shape your financial position. This process is called “reombombage” and there are legitimate companies that provide these services. If you encounter a scammer, you may not be able to buy your home again.
Objective: Reverse mortgage
If your family member is considering a reverse mortgage, they should specifically protect themselves from reverse mortgage-targeted frauds and speak with a HUD-approved advisor first. Make sure they have received at least three different offers in writing and that they understand the terms and conditions before signing. Remember, borrowers usually have three business days in which they can cancel a loan document.
Home Equity Hard Knock
In such a scan, the homeowner is offered a low cost home restoration by the contractor. When the homeowner protests that they cannot work, the contractor suggests arranging financing through the lender’s contact.
The homeowner agrees, the contractor starts work, and then presents the homeowner with a set of paperwork. Some papers may be blank or incomplete and the contractor may threaten not to hire immediately.
After the fact, the homeowner learns that they have applied for a home equity loan with higher rates and fees. In the meantime, the contractor has all the leverage as the work is done and can get a kick-back from the idle lender.