Avoiding Mortgage Scams
(CBS) The FBI arrested more than one thousand people in a mortgage fraud crackdown last week. And though the government is doing what it can to crack down on fraud, consumers applying for a mortgage or looking for help avoiding foreclosure still need to be cautious. Kelli Grant, Senior Consumer Reporter for SmartMoney.com shares steps you can take to avoid getting caught up in a mortgage scam.
First thing is to not ignore red flags. Some behaviors and practices are red flags for all kinds of fraud, mortgage or otherwise. Ask anyone who calls you out of the blue to send information, instead of making a commitment or giving out personal information over the phone. Also steer clear of “limited-time only” offers where you must act immediately, or where you must pay by cashier’s check or wire transfer.
Shopping around is a smart idea. Terms can vary widely, so it’s hard to know what’s out of the ordinary if you haven’t shopped around. Ask questions about the fees involved, which terms will change over the life of the loan, and the total cost of borrowing. Check for complaints at the Better Business Bureau, and licenses at state regulatory agencies.
Always read before signing on the dotted line. Read over every document and don’t sign anything that has incorrect information or is incomplete. There shouldn’t be sections someone will fill in for you later. That would allow an unscrupulous lender to falsify information and potentially obtain a loan you can’t handle or with different terms than you agreed to.
If you’re asked to sign anything that transfers the title of your house to someone else, don’t do it without talking to your attorney first. That’s a major red flag.
Another form of mortgage fraud is inflated appraisals, so look for a good appraiser. Borrowers should check that the appraisal company hired works in the area where the home is located and is familiar with property values in the area. You can also appeal for a new appraisal if the first comes back with a value or details that don’t seem quite right, like comparable properties that are nowhere nearby or not similar at all.
Published on 21/06/2010 13:08:32