Scammers target desperate homeowners, such as those who are struggling with mortgage payments or facing foreclosure. These victims are often susceptible to false promises.
Other criminals claim to be investors or contractors who can make you money. Regardless, it’s important to be vigilant and question anyone who is trying to “help” you or wants money upfront. Here are some of the more common homeowner scams.
Phony Housing Counselors or Lawyers
Scammers will say they represent the government or are a law firm. They claim they can convince your lender to enter a deal to lower your mortgage payments and will handle the details. Ultimately, their claim is that they can save you from foreclosure.They will have you make mortgage payments directly to them, instead of the lender. Scammers will warn you against talking to your lender. But once the criminal has taken your money, they stop returning your phone calls.
According to the Federal Trade Commission (FTC), the Mortgage Assistance Relief Services rules say it’s illegal for a company to charge until it’s given you a written offer for a loan modification or other relief from your lender. You also must accept the offer before being required to pay for the service.
Legitimate counselors are required to run ads or telemarketing solicitations that clearly say they’re not associated with the government nor have been approved by the government or your lender. They may warn you that the lender may not agree to change your loan.
Scammers Claim to Be Forensic Auditors
Criminals will also claim to be mortgage loan auditors or foreclosure prevention auditors. They’ll review mortgage documents to determine if your lender complied with the law. There are several ways they claim the audit will help, such as to:- avoid foreclosure
- speed the loan-modification process
- lower the amount owed
- cancel the loan
Your lender doesn’t have to change anything. If you cancel the loan, you’ll need to return the money you’ve borrowed. Consequently, you could lose your home.
Scams That Skim Your Equity
A scammer can convince you to sell them your house. According to the FTC, the pitch is to pay you for your home until “you can get back on your feet again,” and then the home will return to you.The criminals promise to find a buyer for your home once you sign over the deed to them and move out. They say they will give you a portion of the profit once the house sells.
But once they have the deed, they rent out the home and keep the money. Your lender will foreclose on you. Remember, you’re responsible for an unpaid mortgage. Transferring the deed doesn’t change the fact that the mortgage is still yours.
House-Flipping Scams
A scammer will convince you to invest in property, using proceeds from a reverse mortgage. Criminals buy a cheap house and make superficial repairs.Only after the deal is done and the scammers have the profits, do you realize the house isn’t worth the investment, and you’ll lose money when it’s sold.
Veteran Reverse Mortgages
Although not a total scam, according to Veterans United, some ads imply that the Veterans Administration (VA) offers “no payment” reverse mortgages for veterans.But the VA doesn’t offer reverse mortgages or approve any reverse mortgage programs. These reverse mortgages are just conventional ones that are targeting veterans.
Stealing Your Equity
Unscrupulous appraisers, attorneys, and loan officers work together to inflate your home’s appraisal. You’ll think you have more equity than you really have. You’ll borrow on the phantom equity, and the scammers steal the proceeds when the loan closes.And although you’ll pay closing costs and fees, you’ll be left with little to no cash.
Bait-and-Switch Loan Scams
A scammer will “help” you obtain a deal on another loan (rescue loan) so you can make your mortgage current.The criminal gives you a stack of papers to sign quickly. You’re not given a chance to thoroughly read them or follow up with questions.
Scammers put the pressure on to rush you because they have buried documents transferring your home’s deed to them in the pile. If you transfer the deed, the scammers can sell the house and keep the proceeds. They may evict you. But you’ll still be responsible for the loan.
Home Title Theft
Although rare, title theft occurs when a criminal uses forged documents to fraudulently transfer your property deed into their name. The result is that the thief can sell the property to an unsuspecting third party and pocket the profits. Seniors are often targeted since they often have the most equity.Home title theft is the result of identity theft. Never give out personal information, such as your Social Security number, to anyone.
To stop home title theft, be on the lookout for incoming mail, such as bills or statements, you don’t recognize. Also, if utility bills or mortgage bills stop coming, that is also a warning sign.
According to Allstate, locking your credit when you aren’t using it makes it harder for crooks to steal your title.
Although some people turn to title lock insurance, it is often merely a deed monitoring service that alerts you if your deed is transferred out of your name. The damage has already been done.
Report Fraud If You Suspect It
Scammers make it hard to protect your money. If you suspect fraud, the sooner you act, the more you’ll protect yourself.Report and mortgage fraud to your state’s attorney general or to the FTC fraud site.
The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.
From The Epoch Times