While the housing market slowly recovers, scam artists continue to prey on desperate homeowners. Don’t become a victim! Thousands of homeowners are duped each year through mortgage scams, according to senior counsel for the Fair Housing & Fair Lending Project. Here are a few of the most common mortgage scams to be on the look out for!
Avoid These Mortgage Scams!
- Upfront Loan Modification Fees – Never pay upfront loan modification fees. Homeowners who pony up fees prior to a loan modification receive nothing in exchange. Legitimate lenders will not ask for money upfront. Scammers typically use abbreviations and program names like HARP or HAMP – hoping that the homeowner will be duped into assuming they are dealing with what sounds like a government sponsored program.
- Fake Mortgage Companies – It’s a fact that banks frequently buy and sell mortgages. Savvy scammers contact homeowners and represent themselves as the new owner of your mortgage loan, happily accepting your payments while you are none the wiser. If your mortgage lender sells your loan to another bank, you will receive a letter indicating who the new owner is. You will also receive a letter from the new owner explaining how payments can be made. Scammers are aware of this process, you will want to verify all information before mailing any payments.
- Lease/Buy-Back Agreements – Public records make it possible for con artists to know when a home is in foreclosure. In lease/buy-back mortgage scams, the perpetrator promises the deed transfer is temporary and you’ll be able to rent the home from the new owners and eventually repurchase the home after you get back on your feet. Brian Sullivan, a U.S. Department of Housing and Urban Development spokesman says. “If people are coming to you asking you sign away your home so they can make payments for you, run for the hills!”
Homeowners are more likely to become victims of fraud when they are not aware of the options available to them. Visit the U.S Department of Housing and Urban Development’s Homeowner Help section for information on avoiding foreclosure.