Each year, thousands of consumers see their dreams of owning a home slip away due to scams. Whether you’re purchasing a house or attempting to avoid foreclosure, these scammers can target anyone at any stage of buying or owning a home.
There are several red flags to indicate potential scams such as:
Unreasonable/suspicious payment and fees:
- Exorbitant counseling fees. Most counseling agents approved by HUD (U.S. Department of Housing and Urban Development) provide free or low-cost counseling services.
- Upfront payment. According to the Federal Trade Commission (FTC) Mortgage Assistance Relief Service (MARS), it is illegal to charge a fee in advance for providing help with modifying, refinancing, or reinstating a mortgage.
- Suggestions to stop paying your mortgage company. Ceasing payment to your mortgage company will not increase your chances to modify your loan and can downgrade your credit ratings.
- Suggestions to pay anyone other than your mortgage company. A legitimate agency will never ask you to send payments to them in lieu of the mortgage company. If you have trouble paying your mortgage, you should immediately contact your mortgage lender and a HUD-approved counseling agent for assistance.
- Paying for government-backed loan modification programs. If you qualify for government programs, you should never have to pay from benefitting.
- Promises to prevent foreclosure or modify a loan. No one can make such guarantees and the lender will always have the final say. Housing counselors can guide you through the process and explain your options but the only promise they can make is that they will try their very best to help.
- Guarantees to “save” your home if you transfer over the deed to your house. Do not sign over the deed to anyone unless you are working directly with your mortgage lender. Talk with an attorney before signing anything that transfers the title of your home to another person or organization.
- Self-claimed “government approved” help. Always contact your mortgage lender first to see if you qualify for any government programs to avoid foreclosure. A HUD-approved counseling agency can also help you identify eligible programs.
- Leaseback arrangements. Scammers may offer a rent-to-own program, in which you would stay in your home as a renter after transferring the title to the agency. They promise to allow you to buy back the home after you recover financially but will most likely evict your family or require outrageous rent payments. Again, always consult your attorney before transferring the title of your home to another agency.
- Counselors who pressure you to sign papers immediately. Legitimate housing counselors will never pressure you to sign something you haven’t thoroughly read or fully understand.
- Offers to fill out the paperwork for you. Legitimate housing counselors will never make this offer, plus you should understand exactly what you are signing.
- Financial information solicitation via phone or e-mail. Legitimate housing counselors typically do not request personal financial information over the phone or online. Documentation for loan modification processes are collected and signed in person. If proximity is an issue, documentation is then collected through mail and/or fax.
BMR Insurance wants you to realize the dream of owning a home and be protected from financial predators. If you have questions about home insurance or liability coverage, we want to help. Give us a call at 714-838-1911.