Common Loan Scams: How to Protect Yourself

 

 

The American dream of owning a home has become a nightmare for hundreds of thousands of Americans that are losing their homes in record numbers to various kinds of Mortgage Frauds, aka: Predatory Lending.

Worse, loan scams are at an all-time high.

Not since the Great Depression, has this country seen the onslaught of some mortgage companies using dubious means to extract a greater amount of money than what is owed.

Some types of frauds are the selling of the loan to a servicer, which is actually owned by the lender, and then costs are added onto the loan.

Soon the computer system registers the borrower as delinquent and a Notice of Default and subsequent foreclosure. The homeowner is reeling and unable to resolve the problem before losing their home.

Most lenders advertise in newspapers, magazines, classifieds, television, flyers, and little signs on street corners. None of these should give you the impression they are litigant. Anyone can buy an ad in a publication or on the airwave.

 

Red Flag Warnings of Fraud

The big red flag warnings are unsolicited telephone calls, post cards, or other mailings, and especially a personal visit to your home.

 

A loan that requires advance fees

Advance fee loan implies that you are promised a loan, regardless of your credit ratings if you pay a fee. This fee can vary from $100 to several hundred dollars. These loan con men take the advance fee and vanish without a trace.

Most of the advance fee loan ads feature 900 or 800 telephone numbers and they use alternate delivery systems like private unknown couriers to escape recognition by the U.S Postal Service.

An advance fee loan should not be confused with legitimate pre approved and pre qualified loans. According to Telemarketing Sales Rules, it is against the law to ask anyone to pay for a loan that they have not received. In short, payment for a promise is illegitimate.

No legitimate lender will ever demand payment for possessing any loan. Loan charges you may have to pay will come only after you have actually secured the loan and must be disclosed in the loan documents, as required by the TILA Act.

 

Unexplained Fees and Costs

Many borrowers get shafted because they are not sure what all the cost on their home loan is for or why they have to pay.

When they ask, they are told it's "standard stuff, or you have to pay this cost, or the government requires us to charge you."

No! Do not be intimidated, or, afraid to say anything for fear of looking foolish.

You have a right to see and know all costs and fees up front before you sign for a loan. Review all documents and research words or phases you do not know or understand. Go on line to learn what they are.

You are not required to pay for insurance to get a loan.

Also, what for bait and switch tactics where you are told one price and then the day of signing the loan documents, it is a higher price.

Also, check the final documents after you have signed. Carefully examine every item. Make sure no hidden costs were added to the note.

You have 10 days after signing a note to cancel. Exercise you rights.