Mortgage scams are constantly on the rise with criminals coming up with new fraudulent schemes to get money out of people’s pockets. When people feel like they’ve gone underwater with their mortgages, they begin to adventure out into the alternative ethos to find different ways to pay their loans. This is where these fraudulent people are hiding.
It is easy for you as a homeowner to become a victim to these types of scams. That’s why we’re here to help you out. Here are the top 5 mortgage scams that we see in today’s market.
1. Foreclosure Rescue
There are some fraudulent mortgage companies out there that have started marketing services for foreclosure rescue. Essentially, these companies assure you that they can adjust your loan payments so that you can pay less monthly. Many times, these companies list that they are affiliated with legitimate government programs.
Homeowners, most of whom are in financial distress, will typically agree to their proposals, buy their services, and be left without any sort of help in the end. For a bit more information on what to look out for when it comes to Foreclosure Rescue scams, check out this PDF.
2. Appraisal Fraud
For those of you homeowners or real estate gurus out there who are flipping homes, appraisal fraud is something that you must watch out for. There are appraisers out there that work by fraudulent means. Many appraisal fraud situations happen like this: an appraiser will give an inflated appraisal to the lender. This means that you’ll end up buying the house for far more than it is worth and the bad guy will make a few extra bucks off of it.
3. Straw Buyer Scam
Straw buyers are loan applicants that are fraudulent and are used to acquire mortgages. Some straw buyers who maybe have legal obligations or bad credit that restrict them from buying a home, will hire other, more eligible candidates to sign the mortgage for them. While still illegal, that’s not the worst of it.
Some will take the identity of another person and use them a straw buyer. Essentially, you could be part of a fraudulent mortgage without even knowing it. For a more in-depth look at straw buying, we recommend checking out this page here.
4. Repurchase/Lease-Back Scam
There are unethical lenders out there that will take part in what are known as repurchase or lease-back scams. These scams were created to hurt homeowners who are financial distress. The idea is that the lender will provide a homeowner with a chance to sign their deed over and the lender will then offer them a lease agreement so that they continue living in their home without paying a high mortgage.
The lender will then continue to raise the rent on that homeowner to the point that they won’t be able to pay and will have to leave the home.
5. Predatory Lending
Predatory lending is one of the more popular mortgage scams out there in which a lender will participate in hard-sell lending without actually supplying all of the necessary information. Many fraudulent telemarketers engage in predatory lending, preying on victims with enticing loan offers and contracts. There are a number of different ways that predatory lenders work, so we recommend reading up on it to avoid falling victim.
We hope that this article has given you a little more peace of mind. For those of you who feel that you may have already fallen victim to mortgage fraud, you should contact the Federal Trade Commission to file a complaint.
For those of you who have been victims of mortgage fraud in the past, we urge you to share your experience in the comments!