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Protecting Yourself Against Mortgage Fraud

Posted by Larry Doyle on June 18, 2010 9:20 AM |

Financial distress leaves people increasingly vulnerable to financial predators and resulting financial scams and fraud. With homeowners increasingly underwater on their mortgages, the scum in our society are diligently pursuing and perpetrating their vile works. Homeowners looking to modify their mortgages or otherwise investigating avenues of financial assistance need to be exceptionally careful at this point in time.

What should homeowners do? I would highlight two recommended paths. In my local paper this morning were rules of the road to Avoid Becoming a Victim of Fraud:

According to an FBI advisory, these are steps to take to avoid becoming the victim of mortgage fraud:

Get referrals for real estate and mortgage professionals when you want to buy or sell a home. And once you do, check out their licenses with state, county, or city regulatory agencies. Most of these people are exceedingly honest and above-board—it’s just a small percentage who have given the overall profession a black eye.

Do your own research into what other homes in the neighborhood have sold for.Also, look into recent tax assessments of neighborhood homes.

Beware of “no money down” loans. These are a gimmick used to entice people to buy a home they really can’t afford.

Don’t let anyone talk you into making a false statement on your loan application,like overstating your income or lying about where your down payment is coming from.

Never sign a blank document or a document containing blank lines. Be sure to read and review all loan documents signed at closing. If you don’t understand what you’re signing, get an attorney who can review the documents for you.

In addition to these recommendations, please make a point of accessing a website managed by the Federal Reserve, There is a wealth of fabulous information at this site. Specifically, in regard to protecting yourself against mortgage fraud and foreclosure scams:

Work only with a nonprofit, HUD-approved counselor.
If you are looking for help to prevent foreclosure, be sure the counseling agency is on the Department of Housing and Urban Development’s list of approved agencies. Visit HUD’s website for an easily searchable list of HUD-approved housing counseling agencies, or call 877-HUD-1515 (877-483-1515) for more information. If you are approached by foreclosure counselors–by mail, phone, or in person–make sure the counseling agency is HUD-approved before you do business with them.

Don’t pay an arm and a leg.
You should not have to pay hundreds–or thousands–of dollars. Most HUD-approved housing counselors provide no-cost counseling services and many more provide low-cost counseling. Do not agree to work with a counselor who collects a fee before providing you with any services or who accepts payment only by cashier’s check or wire transfer. In general, do not pay money to anyone unless you know exactly what services you will receive.

Be wary of “guarantees.”
A reputable counselor will not guarantee to stop the foreclosure process, no matter what your circumstances. Working with a legitimate counselor can certainly increase your chances of keeping your home–but be wary of people who promise a sure thing. Again, get the details of your transaction, along with any promises, in writing first.

Know what you are signing–and be sure you sign it.
Don’t let a counselor pressure you to sign paperwork you haven’t had a chance to read through carefully or that you don’t understand. Don’t sign any blank forms or let “the counselor” fill out forms for you. Be sure to talk with an attorney before signing anything that transfers the title of your home to another party.

If it sounds too good to be true, it probably is.
If you feel you may be the target or victim of foreclosure fraud, trust your instincts and seek help. For tips on spotting scam artists, visit the Federal Trade Commission’s webpage on foreclosure rescue scams. Report suspicious schemes to your state and local consumer protection agencies, which you can find on the Federal Citizen Information Center’s Consumer Action Website.

A little bit of caution and a healthy does of Sense on Cents will hopefully go a long way in making sure you do not fall victim to these scam artists.


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