Avoiding Mortgage Scams

It's goes against accepted ethics, but there are those who prey upon the weak and desperate in today's housing market. If you find yourself upside down on your loan, facing default and foreclosure, then beware. There may be those lurking nearby, waiting for a chance to take advantage of your vulnerable situation. They could make away with more than just your money; they could walk away with your home.

There are numerous tell-tale signs that you could be dealing with a swindler.

If the company, or person, in question asks for an upfront fee, it's time to turn on your scam radar. No fees should be exchanged until a service is being rendered. Additionally, your mortgage company will not charge you a fee for counseling about your mortgage.

Do not respond to pressure to sign or to "move quickly." If a legitimate professional is truly interested in your property, they will have no issue waiting days or even weeks for you to make a decision. Never sign anything upon first meeting with someone.

First, visit the Better Business Bureau website at bbb.org. If others have reported fraudulent activity related to this company, it may be reported on the BBB site. Next, contact a lawyer to review any paperwork. And finally, contact your lender to see if you'll need approval before you make any moves.

Even if a company is tell you that your mortgage has been taken care of, be sure you get a copy from your mortgage company of the release form. No release form, no deal.

Be especially wary of "rent to buy" scenarios. A scammer will ask you to sign over the deed to your house in exchange for renting it to your temporarily. The "rent to buy" coming later down the road, when you will rebuy your house at a reasonable price. The catch? They raise your rents until you are unable to pay and then walk away with your home.

In addition to these signs, be sure never to give out personal information. Don't do it over the phone, email, or even in person. Never divulge credit card numbers, social security numbers, or bank account or routing numbers. There is never a reason for any investor or company to want or need that information. If you receive a call from "your bank" asking for you to verify account numbers, etc., kindly ask for their name and department and tell them you'll call them back shortly. Then find the number of your lender or bank from your own paperwork and call.

There have been reports of homeowners signing simple "refinance" or "rent to buy" paperwork, only to find out they really signed over the deed to their house. Not only are they out of a home and any equity they had built over the years, but also out cash paid to refinance.

These issues becomes doubly important when it comes to the elderly in your life. Many times aging relatives feel their problems could be a burden and they wish to take care of matters themselves. The news is rampant of stories of elders being swindled out of thousands. If you have aging parents, be sure to talk to them candidly about any problems they may be having, options they can explore, and the warning signs of scammers.

The bottom-line is this. Never sign anything without having a lawyer review it. There are numerous pro-bono lawyers in most areas that can look over your paperwork for free. Don't worry about insulting the company or person offering you a deal. If they are a true and honest professional, they will have no problem with you taking your time and exploring your options.

Published: October 5, 2010, RealtyTimes, reprinted with permission