Mortgage Scams How to Spot and Avoid Home Loan Fraud

It might not always be easy to spot mortgage scams. However, it can help to know some of the warning signs to look out for. Below are six red flags that might indicate you could be dealing with home loan fraud or mortgage scam:

  • A company tries to pressure you to sign over the deed to your home or sign any paperwork that you haven’t had a chance to read, and/or that you don’t fully understand. Never sign any documents without reading them first. Many homeowners think that they are signing documents for a loan modification or for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership of their home to someone who is now trying to evict them. A legitimate housing counselor would never pressure you to sign a document before you had a chance to read and/or understand it.
  • A company/person you don’t know asks you to release personal financial information online or over the phone. You should only give this type of information to companies that you know and trust, like your mortgage lender or an approved HUD counseling agency.
  • A company/person asks for a fee in advance to work with your lender to modify, refinance or reinstate your mortgage. This fee might be called a processing fee or an administrative fee. However, once you pay the fee, you probably will never hear from this person or company again. When you try calling them, you will never get in contact with them and you certainly will not get your phone calls returned. They may pocket your money, keeping the money for themselves, and do little or nothing to help you save your home from foreclosure.
  • A company/person guarantees they can stop a foreclosure or get your loan modified. Nobody can make this guarantee to stop foreclosure or modify your loan. Legitimate, trustworthy HUD-approved counseling agencies will only promise they will try their very best to help you.
  • A company/person advises you to stop paying your mortgage company and pay them instead. Despite what a defrauder will tell you, you should never send a mortgage payment to anyone other than your mortgage lender. The minute you have trouble making your monthly payment, it is in your best interest to contact your mortgage lender.
  • A company claims to offer “government-approved” or “official government” loan modifications. They may be mortgage scam artists posing as legitimate organizations approved by, or affiliated with, the government. The scammer’s company name and website may sound like a real government agency, but the website may end with .com or .net instead of .gov. You may also see terms like “federal,” “HAMP,” “MHA,” “HARP” or other words related to official U.S. government programs. Contact your mortgage lender first. Your lender can tell you whether you qualify for any government programs to prevent foreclosure or modify your current loan. And, remember, you do not have to pay any organization or company to benefit from government backed loan modification programs.

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