Counting My Pennies

  • About
  • Contact
  • Extra Money
  • Popular Posts
  • Toolkit
  • Privacy Policy

Mortgage Scams To Avoid

October 17, 2019 By Joe Wallace Leave a Comment

mortgage scams to avoid

Mortgage scams to avoid come in a variety of different types and not all of them have to do with purchasing a home or applying for a new loan to so.

The Department of Housing and Urban Development warns consumers that mortgage scams frequently involve foreclosure avoidance schemes or refinance loans instead of new purchases.

New purchase loans are not always scam-free. But there are some things you can do to protect yourself when buying the property as well as staying current on your mortgage and refinancing it when the time is right.

New Purchase Mortgage Scams

There ARE mortgage loan scams that affect borrowers applying for the loan. In general, house hunters should consider avoiding contact with third parties offering to lend you money when you have not personally initiated the contact.

If you are contacted by phone, e-mail, or via social media about a home loan and you did not initiate the contact, your risks of encountering a scam are elevated. Telltale warning signs of a mortgage loan scam may include:

  • Being told “bad credit does not matter”;
  • A mortgage broker who refuses to disclose how they are paid;
  • A lender who refuses to let you buy discount points to reduce the interest rate;
  • Failure to provide an estimate or failure for the actual fees to reasonably match what was provided on the estimate (within certain limits–some cost variation is to be expected);
  • Lenders who fudge the numbers on your income or the sale price of the property.

Refinance Loan Scams

The FHA, HUD, and the Consumer Financial Protection Bureau all warn borrowers against refinance loan scams. Such schemes can be easier to run in some ways because the initial contact may come via large volumes of spam email blasts sent out by the con artists. It does not take much to send thousands of emails with false promises to those who currently have a mortgage.

What are those promises? Lenders who offer the ability to skip payments on government-backed mortgages when refinancing can’t deliver on this promise since in general VA and FHA mortgages (just to name two types of government-backed mortgages and refinance loan programs) do NOT allow you to skip a payment when refinancing.

Another refinance loan scam to beware of? Offering excessive cash back in violation of certain home loan program rules. FHA and VA mortgages and refi loans do not permit cash back to the borrower (usually in excess of $500 or some other fixed amount) except in the form of a bona fide refund for money paid up front for items later included in the loan amount.

Some conventional loans may or may not permit cash back to the borrower, but if you are promised money back at closing time in excess of $500 (or other limit) on a government backed USDA, VA, or FHA mortgage, that is not permitted except as refunds as described above.

Yet another refinance scam to beware of involves loan modifications for borrowers in trouble on their mortgages. Any offer that includes you signing over the title of your property to a third party, or an offer that advises you to “stop making mortgage payments” is to be avoided at all costs.

Read More

Is A Cashback Mortgage A Good Idea?

Saving Money Pros and Cons

Is Rakuten A Scam?

Filed Under: budget, credit reports, financial fitness, real estate Tagged With: FHA loan, FHA mortgage, lending, mortgage, refinance, saving money, scams, VA loan, VA mortgage

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Join Our Newsletter
  Thank you for Signing Up
Please correct the marked field(s) below.

1,true,6,Contact Email,21,false,1,First Name,21,false,1,Last Name,2




Follow Us

Our Most Popular Articles

  • Another MLM Gone – AdvoCare Changes Business Model by Megan Smith
  • What are the advantages and disadvantages of saving money? What are the advantages and disadvantages of saving money? by Megan Smith
  • Billie razor review Billie Razor Review by Megan Smith
  • Can You Earn Money Selling Young Living? by Megan Smith
  • lularoe dani LuLaRoe Dani – Another Don’t Buy by Megan Smith
  • Is Rakuten a Scam? by Megan Smith




Great Investing, Simplified: Get Stock Advisor for Just $99/year!

Survey Junky

Archives

Categories

Copyright © 2021 · Runway Pro On Genesis Framework · WordPress · Log in