The housing market has still not improved and as a result the homeowners have become desperate to get a mortgage and buy a property. Due to this, the homeowners are turning out to be an easy prey for the mortgage scammers. These scammers will say what you want to hear and you will start trusting them and then sign on the dotted lines. Con artists and scammers are duping a large number of homeowners in this way every year and the number has increased in the last few years.
In order to avoid getting scammed by the con artists, its better that you become aware of the common mortgage scams. Here is a list:
1. Theft of deed: This is one of the scams which have become very common in the recent times. In order to get better interest rates, the homeowners/borrowers are lured into signing away their properties to scammers who pose as mortgage professionals. These scammers convince the homeowners that they will modify or refinance their home loans at a better rate and ask them to sign the supposed modification papers. The borrowers actually give away their properties to these con artists once they sign those documents. In order to avoid this scam, it is better to read the documents before signing on the dotted lines. Always remember that if it's too good to be true it probably is.
2. Loan modification scams: Due to the crisis in the mortgage market, loan modification has become quite common. Thus, scams related to loan modification has also increased. It is to be noted here that loan modification does not require any kind of upfront fees. A large number of homeowners fall prey to scam artists who demand upfront fees in order to modify the mortgages. Homeowners should clearly understand the fact the upfront fees are illegal.
3. Scams regarding mortgage sell off: It is true that banks do buy and sell residential mortgages. The scam artists take advantage of this situation and pose as your new lenders and take your payments until you figure out the scam. As per your federal rules, whenever the servicer on a loan changes, the borrower should be notified with a "Goodbye" letter from the current servicer and a "Hello" letter from the new servicer. Also, as a borrower, you should contact your lender and verify the fact whether or not your loan servicer has been changed.
4. Reverse mortgage scams: The easiest targets for the scammers are the elderly homeowners. The elderly homeowners have equity in their property and are also quite vulnerable. A scammer who is targeting the elderly homeowner will actually try to steal the equity in the home or use the senior citizens as straw buyers and borrowers. It has been also found that the elderly homeowner gets a certain amount but is later on evicted from the property after they sign the required documents. So, as stated earlier, it’s better to read the documents, clarify all the details and then sign on the loan documents.
5. Lease/buy-back mortgage scams: Due to the public records, everyone can find out which home is in foreclosure and which is not. Scam artists target those distressed homeowners whose property is in foreclosure. These con artists persuade them to sign a quitclaim deed and transfer the property to a land trust. They promise that the deed transfer is temporary and that the person will eventually re-purchase the home after he/she gets back on their feet. Eventually the borrowers find that the bank forecloses the property in order to recover the debts. So, it’s always suggested that alarm bells should ring in your head once you find someone asking you to sign away your home.