How to Avoid Becoming a Victim of Mortgage Fraud

It’s probably too wonderful to be true if it sounds too good to be true. Never sign a blank or partially filled-in document, which leaves you exposed to fraud. If you don’t comprehend something, don’t sign it.

Theft of a Mortgage

• Check the licenses of industry professionals with state, county, or city regulatory bodies to get referrals for real estate and mortgage professionals.
• Be wary of extravagant promises of huge profits in a short amount of time.
• Strangers and uninvited interactions, as well as high-pressure sales practices, should be avoided.
• Examine textual data, such as recent comparable sales in the neighbourhood and other papers, such as tax assessments, to confirm the property’s valuation.
• If you don’t understand what you’re signing and agreeing to, reread the paperwork or seek legal advice.
• Make sure the name on your application corresponds to the name on your ID.
• Examine the title history to see whether the property has been sold numerous times in a short period since this could indicate that it has been “flipped” and the value has been artificially boosted.
• Check your information against the information in the loan documentation to ensure it is accurate and comprehensive. Know and comprehend the terms of your mortgage.

Mortgage Debt Relief Programs
Be wary of e-mails or web-based advertisements that promise to eliminate mortgage loans, credit card debts, and other debts in exchange for a fee to prepare documents to satisfy the debt. These documents are usually titled Declaration of Voidance, Bond for Discharge of Debt, Bill of Exchange, Due Bill, Redemption Certificate, or other similar variations. They do not accomplish what they claim.

Remember that there is no one-size-fits-all solution to getting out of debt. Borrowers may find up paying hundreds of dollars in fees without having their debts eliminated or reduced.

Fraudulent Foreclosure Schemes
Homeowners are misled into believing that they can save their homes in exchange for a deed transfer, usually in the form of a Quit-Claim Deed and up-front fees. The perpetrator profits from these schemes by re-mortgaging the property or pocketing fees paid by the homeowner without preventing the foreclosure. The victim loses both the property and the up-front fees.

• Be cautious of offers to “save” homeowners whose mortgages are about to default or whose homes are already in foreclosure.
• Seek the help of a knowledgeable credit counsellor or an attorney.
• Schemes of Predatory Lending
• Before you buy a house, do some research on the prices of similar houses in the area.
• Shop around for a lender and compare expenses; be wary of lenders who claim to be your sole option for obtaining a loan or owning a home.
• Be wary of “no money down” loans, which are a ruse designed to persuade people to buy property they can’t afford or qualify for. Be wary of the mortgage expert who falsifies facts to qualify the consumer for the loan.

• Allow no one to persuade you to take out a loan you cannot afford to repay.
• Allowing someone to persuade you to make a false statement about your income, the source of your down payment, or the nature and length of your employment is not a good idea.
• Check all loan paperwork for accuracy, completeness, and omissions before signing them at closing or before closing.
• Be aware of any costs or loan terms you have not consented to before closing.
• If the cost of a home improvement increases after you accept the contractor’s financing, be wary.

PROTECT YOURSELF FROM FRAUDULENT MORTGAGE FINANCING
The following post appears courtesy of the Civil Division’s Consumer Protection Branch. The distressed condition of the national housing market, paired with high unemployment, has created a fertile environment for unscrupulous fraudsters seeking to take advantage of desperate homeowners. Many homeowners who turn to loan modification or foreclosure “rescue” companies for help ultimately find that they have been scammed. An emerging trend in recent months involves mortgage assistance relief scams. These scams target homeowners with promises to save them from foreclosure, get them a reverse mortgage, or lower their mortgage payments—in exchange for an advance or monthly fee. Sadly, many of these homeowners never get the relief they have been promised. These scams use a variety of simple tactics to identify their financially-distressed victims. Some scammers locate distressed borrowers from published foreclosure notices or other publicly-available sources.

In contrast, others rely on mass-marketing techniques such as flyers, radio, television and Internet advertising to lure in distressed borrowers. Still, others deceptively suggest an affiliation with a government agency to quickly earn the trust of unwitting victims. Because this fraud is so insidious and preys on individuals who are at their most vulnerable point, the Consumer Protection Branch in the Justice Department’s Civil Division is committed to prosecuting these criminals and bringing justice to their victims. But individuals are really on the front line in the battle against mortgage fraud. Information is power, and you can protect yourself from mortgage fraud by keeping the following tips in mind:

• Be aware of individuals that contact you through advertising such as flyers, radio/television or the Internet with promises to modify the conditions of your mortgage; if their claims seem too good to be true, they usually are.
• Loan counselling and modification services are generally provided free from your lender and a Department of Housing and Urban Development (HUD) counselling centre.
• Never give someone else the title to your home, make mortgage payments to someone other than your lender, or cease making payments entirely – these are all surefire methods to jeopardize your financial investment.
• Examine the names, seals, logos, and representations used by mortgage rescue companies, as they may be designed to trick borrowers into believing they are entitled to the benefit of a government program rather than committing to a loan that must be repaid. A government agency will never require advance fees or guarantee a specific result.
• Some reverse mortgage loan scammers are trying to sell other financial products to borrowers, so be wary of brokers who want you to get a loan so they can sell you long-term care insurance, annuities, or other investments.