How to Avoid Mortgage Scams
With record numbers of individuals seeking home loans these days, it’s no
surprise that scam artists have developed new ways to separate borrowers from
their money. Mortgage scams are on the rise and typically target people who are
overextended, have bad credit, or are in need of financial relief. These scams
can cost a lot – in fact, they can result in the loss of your home. Guard
yourself against con artists with a little background on common mortgage scams:
Slight-of-Hand Signings
There are documented cases of homeowners who unwittingly signed away the title
to their homes because they were confused by paperwork. With any decision
involving your finances, get everything in writing and insist on reading the
documents carefully before signing. Ask questions and make sure you understand
the answers. Be sure you never sign paperwork with blank spaces or allow
someone to rush you through the process.
High-Priced Home-Buying Seminars
You’ve seen ads in the newspaper (and on bus benches) for those
home-buying seminars or programs catering to people with less-than-perfect
credit. If you’re considering such services, check out their fee
structure first, and make sure you’re not buying into a scam. If
you’re required to pay large fees in advance, chances are the service is
not legitimate. Consult the Better Business Bureau before taking action.
The Reconveyance Racket
Say you’re struggling with mortgage payments or in foreclosure.
A business or individual offers to buy the property and sell it back to you,
once you get your finances back in shape. The process is called
“reconveyance,” and there are legitimate companies offering these
services. If you encounter a scammer, however, you could find yourself unable
to repurchase your home.
Target: Reverse Mortgages
If a member of your family is considering a reverse mortgage, they
should protect themselves against scams specifically targeting reverse
mortgages and speak with a HUD-approved counselor first. Make sure they get at
least three separate offers in writing, and that they understand the terms and
conditions before signing. Remember, borrowers generally have up to three
business days in which they can cancel a loan document.
Home Equity Hard Knocks
In this type of scam, the homeowner is approached by a contractor
offering home renovations at an affordable price. When the homeowner protests
that they can’t afford the work, the contractor suggests he arrange
financing through a lender acquaintance. The homeowner agrees, the contractor
commences work, and then presents the homeowner with a bunch of paperwork. Some
of the papers may be blank or incomplete and the contractor threatens to walk
off the job unless they are signed immediately. After the fact, the homeowner
discovers they’ve applied for a home equity loan with high rates and
accompanying fees. At this point, the contractor has all the leverage because
the work is underway and he’s probably received a kick-back from the
unscrupulous lender.
Whether you are buying a home, refinancing your mortgage, or shopping for a
home equity loan, it pays to work with a reputable lender. Visit
HomeLoanCenter.com to learn more about finding the right mortgage at
the right price..
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