Don’t Fall for These Mortgage Scams

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It seems today that scams are everywhere we look. The internet has certainly helped the scams become more frequent and easier to pull off. The best thing you can do as a consumer is educate yourself on the latest scams occurring so that you can know when an offer is legitimate and when you are falling for something that might put you into financial destruction.

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The Promise of Foreclosure Rescue

If you are in over your head in late mortgage payments, you may be willing to try anything to save your home from foreclosure. Thieves know this so they will often do what they can to get your attention. If you receive emails or phone calls promising that they can help you save your home from foreclosure, don’t fall for it. The largest red flag is when they ask for money upfront. They will typically ask for a large sum of money and in exchange, get your lender to stop the foreclosure process.

The only one that can stop the foreclosure process is your lender. If you stay in close contact with your lender and let them know you are having trouble, you may be able to work out a payment plan. Don’t just assume this though and don’t talk about the situation with anyone but your lender. The only exception would be if you involved an attorney to help you out of this scary situation.

The HARP Scam

The Home Affordable Refinance Program helps homeowners that are current on their mortgage payments, but are underwater. The program helps these homeowners refinance their loans to lower their rate or get better terms. Because they are underwater, any other loan program would not apply (unless they have an FHA loan).

Scam artists are using this opportunity to promise homeowners in this situation the world. They tell them they will get them the best loan possible even though they are underwater. All you have to do is provide your personal information, such as you would on a loan application, or pay money upfront. Both of these requests should be your red flag.

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First, lenders aren’t going to contact you to ask you to refinance with HARP. It’s up to you to seek out lenders. Second, lenders don’t ask for information over the phone or for money upfront. If the ‘lender’ you are talking to doesn’t have the HARP logo or you can’t find their information on Harp.gov, don’t fall for the scam. It’s good practice to only give your personal information to companies that you seek out and that you research ahead of time.

Loan Servicing Scams

Some scam artists try to make themselves look like your new loan servicer. They tell you that your loan is being transferred and that in order to start the processing you have to pay a fee. Some scam artists don’t demand the fee, but change the address where you send your mortgage payments. They then collect your payments. Borrowers that have fallen for this scam don’t realize it until their ‘real’ mortgage company contacts them about their missed payments.

If you are ever unsure if a letter or phone call is coming from your actual lender, call them yourself. Ask them directly about the communication you received to see if it is legitimate or not. This is especially important if you are going to start sending your payments to another address or if you will pay money upfront.

The Promise of Loan Modification Scam

Scammers often call homeowners that they know could use a loan modification and promise them the world. If someone contacts you telling you that they can lower your interest rate or decrease your principal if you just pay money upfront, don’t do it. It’s likely a scam.

Your lender or any other lender, for that matter, won’t call you and offer a loan modification. If you want to apply for one, you need to apply for it yourself with the lender. You can use your current lender or any other lender out there. But you have to approach them and apply for it. No loan company is going to voluntarily ask to modify your loan for you.

The Reverse Mortgage Scam

Scam artists love to prey on the elderly. They know that they are vulnerable so they act on their need for money. They can tell which homeowners own their home free and clear, and these are the homeowners that are most often targeted.

The scam artists promise to get the elderly a reverse mortgage with little fees involved in exchange for their personal information. The scam artists then steal the equity in the elderly person’s home, leaving them without a home and with a large debt on their shoulders.

Just like any other loan program, unless you contact the lender yourself, don’t fall for the scam.

Mortgage scams are becoming more common today. The best thing you can do to protect yourself is guard your personal information and do your research. Don’t give any information to anyone that contacts you. If you initiate the conversation, you may use your own common sense regarding providing your personal information. We suggest you do plenty of research to make sure the lender is legitimate before doing anything.

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