Unfortunately, fraud targets people during times of hardship, and the Covid-19 pandemic was not an exception. During the pandemic, there has been an increasing number of scams and frauds. Recently, there has been a major increase in mortgage fraud. With these numbers rising, how are you supposed to keep yourself safe from the repeated scams?
How to Identify Mortgage Fraud:
6 red flags
- A company/person asks for a fee in advance to work with your mortgage company to modify, refinance, or reinstate your mortgage.
- A company/person guarantees they can stop a foreclosure or get your loan modified.
- They advise you to stop paying for your mortgage company and pay them instead.
- They pressure you to sign over the deed to your home or sign any paperwork that you haven’t looked through or do not fully understand.
- A company other than your mortgage company claims to offer “government-approved” or “official government” loan modifications.
- A company you do not know asks you to release any personal financial information online or over the phone.
Staying away from mortgage fraud seems to be an easy task, but it can be tricky. Most often, scams can be described to be realistic ideas. However, if it seems “too good to be true,” it usually is. Just be wary of the scams that are currently happening!
Be Wary of These Scams:
- Foreclosure Rescue Fraud:
In this situation, a company or person will deliver false promises of being able to save your home. These scammers often prey on people on the verge of foreclosure, and the promises they bring to the table tend to be too good to look past. Even at your most vulnerable, you need to look past these false promises and be aware of the scam. They also ‘guarantee’ a loan modification with a reduced mortgage payment. If you feel as if you are being scammed, go to a local mortgage company and ask questions!
- Title Scams:
This is when someone offers to give you a loan or ‘fast cash’ in exchange for taking over your mortgage and title. The option to keep your name as a renter is usually offered as a promise that you can buy the home back once you are back on your feet. However, this is a red flag! Again, this offer seems too good to be true, and can often make you homeless. Once the deed is transferred, there is no guarantee that this will ever be your home again.
- Mortgage Debt Elimination Schemes:
Be aware of emails or web-based advertisements that promote the elimination of mortgage loans and credit cards and other debts while requesting an up-front fee to prepare documents to satisfy the debt. The documents are typically entitled Declaration of Voidance, Bond for Discharge of documents that do not achieve what they claim. Remember, there is no magic cure to all of the debts that you have incurred.
- Predatory Lending Schemes:
Before purchasing a home, research information about the prices of homes in the neighborhood. Be sure to shop for a lender and compare the costs, but be on the lookout for lenders who tell you that they are your only chance of getting a loan or owning a home. This is a passive-aggressive tactic that is not normally practiced by any mortgage lender. There are also schemes that do not require a down payment, “no money down” loans. This is a gimmick used to entice consumers to purchase a property that they likely cannot afford or be qualified for. Make sure to not let any lender convince you to borrow more than you can afford. Do not let anyone persuade you into making a false statement such as overstating your income, the source of your down payment, or the nature and length of your employment.
During times of distress, you need to remain on guard. As the pandemic continues, scams and fraud do too. It is understood that this is unavoidable, but if you have the knowledge and the tools to help you from “getting sucked in” will be for your benefit. Be sure to ask plenty of questions when something seems ‘off’ about a situation. Read and carefully review all loan documents signed at closing or prior to closing for accuracy, completeness, and omissions.
Be careful out there!