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 swindle borrowers. Mortgage scams are on the rise, and scam artists typically target people who are overextended, have bad credit or are in need of financial relief. These mortgage scams can cost a lot — even the loss of your home. Guard yourself against scam 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 financial decision, get everything in writing and insist on reading the documents carefully before signing. Ask questions and make sure you understand each answer. In order to avoid slight-of-hand signings, never sign paperwork with blank spaces or allow someone to rush you.
High-Priced Home Buying Seminars
You've seen ads in the newspaper (and on bus benches) for home buying seminars or programs for people with less-than-perfect credit. If you’re considering these home buying seminars, check out their fee structure first, and make sure you’re not paying scam artists. Home buying seminars that require large fees in advance are probably illegitimate. 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. This process is called reconveyance. Although some legitimate companies offer reconveyance services, agreeing to this process with scam artists may result in the loss of your home.
Target: Reverse Mortgages
If a family member is considering a reverse mortgage, she should protect herself against mortgage scams regarding reverse mortgages, and speak with a HUD-approved counselor first. Get at least three separate offers for reverse mortgages in writing. You should understand all terms and conditions before signing. Remember, borrowers generally have up to three business days to cancel loan documents, reverse mortgages included.
Scam Artists and Home Equity Hard Knocks
In this type of scam, a contractor approaches a homeowner, offering affordable home renovations. When the homeowner says he can’t afford the work, the contractor suggests that he arrange financing through a lender acquaintance. The homeowner agrees, the contractor commences work, and then presents the homeowner with a bunch of paperwork. Although some may be blank or incomplete, the contractor threatens to walk off the job unless they are signed immediately.
After the fact, the homeowner discovers that he's applied for a home equity loan with high rates and fees. At this point, the contractor has all the leverage because the work is underway, not to mention he’s probably received a kick-back from the unscrupulous lender.
Whether you're 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 find the right mortgage at the right price.
