6 Quick tips to prevent getting caught in a scam

6 Quick scam tips to look out for:

  • Individuals/companies ask for funds in advance with the promise that they will work with your lender to modify or refinance your mortgage.
  • Guarantees are made to you that may be impossible, like preventing or stopping a foreclosure.
  • You are asked to stop paying your bank and pay an individual/company instead.
  • You are pressured into signing documents that you do not understand or have not been able to read thoroughly.
  • You are asked for personal financial information over the phone or you are asked to give it to someone who you are not working with professionally.

Scams hiding behind every corner….
It seems that scams and fraud are everywhere in today’s world and we all seem to say, “Well, that could never happen to me”. Clearly that is not the case, as we are seeing with Bank of America, fraud and scams are alive and growing, especially in our industry.  We need to open our eyes and know for what to look. This week we will focus on loan modification scams. Here are a few scams that are making headlines and some tips to help you know what to keep an eye out for in the future.

  • *Phony Counseling or Foreclosure Rescue Scams - In this case, the scammer will act as a negotiator, telling you that if you pay him/her an upfront processing fee they will meet with your lender to modify your loan.  This individual may even try to convince you to pay your mortgage payment to him/her while they are hashing out the loan details with your lender.  After a few months of payments they will take your money and run.
  • *Fake “Government” Modification Programs - In this scam, you may be asked to pay up-front fees to see if you “qualify” for a government modification to your loan.  These scams commonly happen on-line, so look out for trick words that make you believe that this is an actual government program. Key words to look out for include “federal”, “HAMP”, “MHA”, and “HARP” along with any acronyms that are typically tied with government related programs.
  • *Forensic Loan Audit - Again, this is another case that you may be asked to pay a fee upfront for services. An individual referred to as a forensic or mortgage loan “auditor” will offer to review your loan documents to see if your lender complied with federal and state lending laws. This may result in the cancellation of your loan, in which you will have to return loan funds and deal with the consequences that result from that.
  • *Bait-and-Switch - This scam catches individuals that do not read and understand their documents before signing them. The scammer will present documents to the individual that presents a new loan modification, but really the documents are signing over the title or deed to your home.  From this point, the scammer will trade in your title for a “rescue loan”.
  • *Rent-to Own or Leaseback Scheme - The scammer will talk you into giving up the title to your home, from there you will pay him/her rent, while they may never plan to sell you back your home. These situations are bad because you can be stuck with an unpaid mortgage and possible foreclosure while you are still responsible for your mortgage, even if your deed has been transferred to someone else’s name.
  • *Bankruptcy to Avoid Foreclosure - Again, this scam will more than likely involve an upfront fee collection. With a promise to meet with your lender, the scammer collects the fee and files a bankruptcy case in your name. While the bankruptcy claim may stop the foreclosure of your home temporarily, you will eventually have to pay on your mortgage. If you do not begin to make payments, your lender may foreclose on the property anyway. You are in the red a few ways with this scam, you have lost the money that you paid upfront to the scammer for their services and if the bankruptcy stays on your credit report, that can mean 10 years of hardships when trying to buy a home or obtaining credit, just to name a few.

*Information provided by Loan Modification Scam Alert Campaign.