Watch Out For Mortgage and Housing Scams

We are continuing to see the fall-out of the housing slump which means more foreclosures, falling home values, and more financially distressed homeowners. Scam artists love to prey on people that are in a tough financial situation. It is only fitting that scammers are trying to capitalize off of the housing crisis. Here are some housing scams that you need to watch out for:

Rescue Scams: Con artists will set up fake companies acting like they want to help you keep your house or pay your mortgage payment. What they do is get you to sign a document called a “quit claim deed” that essentially signs the deed to the property over to them. Then, they go and sell your house out from under your feet, and you are forced to leave the house.

Equity Stripping Scams: Renters beware. Fraudulent investors don’t make the mortgage payments, but rents out the vacant property until the lender forecloses on the property.

Straw Buyers: The identity of the borrower is concealed through the use of a nominee who allows the borrower to use the nominee’s name and credit history to apply for a loan.

Fraudulent Appraisal: Usually a whole ring of scammers from the mortgage broker, investor, and title company are paid off to help inflate the value of an appraisal on a house. The home might really be worth $150,000, but the house is sold for $200,000 to an unsuspecting buyer.

Air Loans: These are loans secure for property that doesn’t even exist. Every document is made up out of “thin air”.

Silent second: Either the mortgage broker or seller gives the buyer the money for a down payment to help them qualify for the loan. If the primary lender doesn’t know about it, then it’s definitely not a legal move. Make sure if the seller offers this as an incentive to buy the house, that they have received pre-approval from a lender.

Tips for Avoiding Housing and Lending Scams:

1. Never sign a document that you don’t understand.
2. Do your homework. Research the area you want to buy a house and recent sales made in that neighborhood.
3. Never leave any part of your application blank.
4. Never give out personal information over the phone when someone first contacts you.
5. Use this rule of thumb. If it sounds too good to be true, it probably IS too good to be true.

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