There are a record number of people looking for home loans right now, so it's not surprising that con artists have come up with new ways to steal money from people who want to borrow it. Mortgage scams are on the rise, and they usually take advantage of people who have too much debt, bad credit, or need money. These cons can cost a lot of money and even cause you to lose your home. Learn about common mortgage scams to protect yourself from con artists:
Signs Made Without Being Seen
There are known cases of people signing away the title to their homes by accident because they didn't understand the paperwork. Whenever you make a financial decision, put everything in writing and make sure you read everything carefully before signing. Make sure you understand the answers when you ask questions. Make sure you never sign blank paperwork or let anyone rush you through the process.
Seminars on buying a home that cost a lot
You've seen ads for seminars or programmes that help people with less-than-perfect credit buy a home in the newspaper and on bus benches. If you're thinking about using such a service, check out how much it costs and make sure it's not a scam. If you have to pay a lot of money up front, it's likely that the service is not real. Before you do anything, check with the Better Business Bureau.
The Racket of Reconveyance
Say you're having trouble paying your mortgage or are already in foreclosure. Someone or some business offers to buy the property and then sell it back to you when your finances are better. This is called "reconveyance," and there are legitimate businesses that do it. But if you deal with a con artist, you might not be able to buy your home back.
Target: Reverse Mortgages
If someone in your family is thinking about getting a reverse mortgage, they should talk to a HUD-approved counsellor first to make sure they don't fall for a scam that only targets reverse mortgages. Make sure they get at least three different written offers and that they understand the terms before they sign. Remember that most loan documents can be cancelled by borrowers within three business days.
The Hard Knocks of Home Equity
In this type of scan, a contractor goes up to the homeowner and offers to make improvements to the house at a reasonable price. When the homeowner says they can't pay for the work, the contractor suggests that he get a loan from a lender he knows. The homeowner agrees, the contractor starts working, and then the homeowner is given a lot of paperwork to sign. Some of the papers may be blank or not fully filled out, and the contractor has threatened to leave the job if they are not signed right away. The homeowner finds out after the fact that they applied for a home equity loan with high rates and fees. At this point, the contractor has all the power because the work has already begun and the shady lender has probably given him a kickback.
