Scammers target mortgage and home equity with savage energy in 2020: You might have already read our previous blog about popular mortgage scams. Although this blog stands on its own, this week’s blog is really the promised Part Two of the Mortgage Scam Issue.
A Quick Backstory-Review from Mortgage Scams
Below is a quick summary of our Part One, in which we revealed some red flags for recognizing scams and schemes. We called them red flags.
Red Flag Number One—the Edgy Escrow Wire Fraud Scammers
Scammers target mortgages with an email or phone call to the homeowner. The scammers claim to be from someone at the “so-called” title or Escrow Company. Like we warned last week, they even have a similar website to your real escrow company. The scammers give you specific instructions on where to wire your escrow funds. Don’t do it. Read all the details on our previous blog.
Red Flag Number Two: Scammers Target Mortgages with Predatory Loan Flipping
An insidious fraud with a cute name, loan flipping occurs when an unethical lender convinces you to refinance your mortgage repeatedly. And naturally, they persuade you to borrow more money each and every time. Eventually, you will reach the point of no return with a mortgage far beyond what your house is worth.
Red Flag Number Three: Scammers Target Mortgages with Fiendish Foreclosure Relief
If you fall into financial difficulties, you might get behind in mortgage payments. That’s when the mortgage scammers behind Foreclosure Relief appear. They bring all kinds of so-called Foreclosure Relief. Then they charge you extreme fees. Again, learn how to protect yourself in our previous blog.
Red Flag Number Four Beware of Mortgage Scammers Target by Impersonating Government Program, HARP
The realtors at Zillow recently warned homeowners about scammers who dress up their fraud by impersonating HARP deals. If you should get communication that you suspect is an imposter, visit the website of your current lender. There, you should be able to view a valid list of approved lenders. And finally, contact your current lender directly to get answers to any questions you may have and to see if you qualify.
“When you get offers to refinance through HARP, Palm State advises you to do a quick search to discover the truth behind the company making the offer. Are they the genuine HARP representatives? (Again, please read more at our previous blog.) The righteous reputation of this government program could have been destroyed by scammers and their ruthless impersonations as its representatives.
The Newest Red Flag Number 5: Scammers Target Renters Too
Another red flag went up while we were researching this article. We realized scammers who target mortgages also target renters. We do not usually write very much about renters. However, we felt this scammer material was so important we would be remiss if we did not report it as part of our coverage of property scams. After all, many of our first-time buyers are renters right before they come to us.
Beware of Online Ads and Craigslist
Scammers are targeting renters by posting ads on Craigslist or social media. Firstly, they represent themselves and their properties with stolen listing photos. Then, they lure in renters by phone and email, although they have no connection with the listed property or their owners.
The property is not the point; the scammers ask for an upfront payment or large deposit just to “show” or “reserve the property.” Then, they disappear, and so does your money.
Palm State Mortgage Sounding the Alarm: Scammers Target Renters
Almost unbelievably, such rental scammers operate at a high level of wicked efficiency. “An estimated 5.2 million U.S. renters say they have lost money from rental fraud, according to a recent survey from experts at ApartmentList.”
Sadly enough, it is the younger generation scammers target with this fraud. “Younger renters are the likeliest victims, with 9.1 percent of 18- to 29-year-old renters having lost money on such a scam.” This compares with 6.4 percent of all renters, the survey revealed. And of those who did lose money to scammers, one in three lost more than $1,000. This was likely after paying a security deposit or rent on a fake rental property…”
How to Spot the Possible Fraud When Scammers Target Mortgages
Knowing how scammers operate leads you directly into discovering how to protect yourself, your mortgage and your family from them. So, if you detect any of the following behaviors in a mortgage company, you should immediately become suspicious.
1. The No-Questions-Asked Company:
Firstly, do not trust a company that ignores your ability to make payments. Did you know that your mortgage payment should be under 28% of your gross monthly income? If a company has very few financial questions about your fiscal life, don’t trust it. Questions are good
2. The No-Options-For-You Company:
Secondly, You notice that the company does not offer you an option for purchasing points. If you are not getting an option to purchase points or discount points, you might miss an option to lower the interest rates. They should at least discuss it with you. To clarify, “A point or discount point is like prepaying your mortgage interest. Borrowers purchase points to lower the amount of interest they will pay on the loan. Your lender should give you the option to lower your interest rate through the purchase of points.” So, you can see, they should at least discuss it with you.
3. Crazy-Loan-Costs Company:
Did you know most loan costs are fixed, regardless of how much or how little you borrow? Suppose you have a mortgage of $150,000 or more, then you can expect the closing costs to be 2-5 percent.
Likewise, if you are borrowing less than $150,000, your costs could actually exceed 5%. Be aware that it all depends on the lender. You see, some lenders implement costs into the loan by creating a higher interest rate. But they must honestly disclose that to you. Clearly. Legally.
At Palm State Mortgage, we always discuss loans with trusted multiple lenders in an effort to find you the best possible deal for your financial situation. And we dissect the total cost of the loan they are proposing. We are well aware that if we see loan costs well beyond 5%, we need to know exactly why.
A Valentine Message of Thanks
Thank you from our hearts to yours, for reading our Palm State Mortgage Blog. And next week we will expose four more suspicious behaviors. We will show you more signs that might indicate scammers have targeted your mortgage in Part 3 of our special series on Mortgage scams. Fraud is afoot, but Palm State Mortgage is here to stamp it out. We are very protective of home buyers and we want homeownership to become a positive step in your life and a beautiful experience for your family.