Mortgage scams and your rights
The ongoing mortgage foreclosure crisis has sparked a cottage industry of so-called “foreclosure rescue” companies. But advocates and government officials warn that a significant number are little more than deceptive operations designed to separate distressed homeowners from their money, and sometimes their houses as well.
Inflated Appraisals: An appraiser acts in collusion with a borrower and provides a misleading appraisal report to the lender. This report inaccurately states an inflated property value.
Silent Second Mortgage: Buyer of a property borrows the down payment from the seller through the issuance of a non-disclosed second mortgage. The primary lender believes the borrower has invested his own money in the down payment, when in fact, it is borrowed. The second mortgage may not be recorded to further conceal its status from the primary lender.
Equity Skimming: An investor may use a nominee, false income documents, and false credit reports, to obtain a loan in the nominee’s name. Subsequent to closing, the nominee signs the property over to the investor in a quit claim deed which relinquishes all rights to the property and provides no guaranty to title. The investor does not make any mortgage payments and rents the property until foreclosure takes place a few months later.
Foreclosure Schemes:Are one of the worst. The loan agents mislead the homeowners into believing that they can save their homes in exchange for a transfer of the deed, usually in the form of a Quit-Claim Deed, and up-front fees. The perpetrator profits from these schemes by remortgaging the property or pocketing fees paid by the homeowner without helping to prevent foreclosure. The victim suffers the loss of the property as well as the up-front fees. Be aware of offers that promise to save homeowners who are at risk of defaulting on loans or whose houses are already in foreclosure. If you are near a foreclosure seek a qualified credit counselor or attorney to assist.
- Understand the terms of your mortgage. Check your information against the information in the loan documents to ensure they are accurate and complete.
- Never sign any a blank document or loan documents that contain blanks. Information that is not approved or signed by you may be added later on.
- Look at written information to include recent comparable sales in the area, and other documents such as tax assessments to verify the value of the property.
- Understand what you are signing and agreeing to. If you do not understand, re-read the documents, or seek assistance from an attorney.
- Do not let anyone convince you to borrow more money than you can afford to repay.
- Do not let anyone persuade you into making a false statement such as overstating your income, the source of your down Make sure the name on your application matches the name on your identification.
- Review the title history to determine if the property has been sold multiple times within a short period of time. It could mean that this property has been flipped and the value falsely inflated or there may be other problems with this property.
- An outrageous promise of extraordinary profit in a short period of time signals a problem.
If you follow the above guidelines, you can avoid having bad mortgage scam experience.