Unfortunately, mortgage scams are very common. So exactly what can you do to protect yourself from one of these scams. The first step in protecting yourself is education. Learn the types of scams that are out there and how to recognize them.
Here are a few of the most common mortgage scams.
1. Loan audit offers. Generally a salesperson will call a homeowner and say that they are going to be auditing their mortgage documents so that they can use the violations to force their lender to approve their loan modification. The scam is that they find violations a majority of the time. They charge the homeowners anywhere from $1000 to $5000 for their fee.
2. Money back guarantees. This scam involves promising the homeowner that they can guarantee them a loan modification. They will tell you to stop making your mortgage payments and do not communicate with your mortgage company. However, no one can guarantee you a loan modification or the promise that they can stop a foreclosure. Additionally, some people are aware of this scam so the scammers will tell you that you do not have to pay upfront but will wait until about the third meeting before they request a fee. Note: you should never pay a fee for loan modification assistance.
3. You are told to stop contacting your lender. The scam is they tell the homeowner not to communicate with their lender because they can get them a better deal. In addition, never trust someone that says they will talk to your lender on your behalf.
4. Government agency scam. The homeowner receives a call and the scammer says they represent the lender. The homeowners are told by the scammer that they are from a government agency and that they have information about a mortgage settlement. They typically receive a $500+ fee to "help the homeowner get their money from the settlement". They get a bank routing number from the homeowner to "facilitate the refund" and then drain their account.
5. The mass joinder scam. The scammer will send the homeowner a notice that they have been wronged by their mortgage company and that they may be eligible for restitution. They are then told to pay $2000 or more to participate in the lawsuit. Note: you should never have to pay to be a part of a class action lawsuit.
So what can you do if you think you have been the victim of a mortgage scam? You should report the scam immediately and notify your lender as well. Unfortunately, it may be too late to stop a foreclosure but you may be able to stop it from happening to someone else.
If you have any questions about mortgage scams you can always contact your realtor to get some solid advice. Your realtor will also be able to help you with who you should contact and what you should do next. Your realtor may also be able to help you avoid a mortgage scam if you contact them before you proceed with a questionable offer from a scammer.
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