Avoid Common Real Estate Scams - Fake Lender Terms - Stealing You Home or Land
Scams seem to be common across all facets of life, and real estate is no exception. Real estate scams target Home buyers, sellers, and owners alike, and they're fairly common. While no one wants to be the victim of a scam, it's possible if you're not aware of the tactics scam artists employ. Read on for some of the most common scams aimed at homeowners today.
Loan Modification Scams
When it comes to modifying your mortgage loan, be wary of anyone offering to do it that you don't directly contact. Loan modification scams occur when a scammer offers to negotiate with a homeowner's lender to lower the owner's interest rate for a certain fee. Often, scammers will guarantee results, even going so far as to offer a "money-back guarantee." The scam results in the homeowner paying the fee, only to receive no modification and possibly end up behind on mortgage payments and/or short on funds. There are a number of online resources that identify companies that have been or are being sued by the Federal Trade Commission for their loan modification businesses.
Deed Theft
Always be cautious of any actions regarding the deed of your property. Deed theft scams involve the fraudulent transfer of a home or property to a third party. Deed theft can come in different forms:
- homeowners get tricked into signing over their deed via a fake document
- homeowners may be aware they're signing over the title of their property but only temporarily while they seek to refinance or take out a second mortgage; they eventually realize they've signed over their property outright
If you're contemplating anything that may modify your current mortgage, make sure you ask questions and read the fine print before you sign anything, and always ensure you're working with a reputable company.
Impersonation Scams
Foreclosure and other financial issues related to home ownership can make people desperate when trying to avoid losing one's home. Impersonation scams occur when homeowners are tricked into thinking they're hiring a company to prevent their homes from falling into foreclosure. Homeowners will pay the company hundreds of dollars a month to prevent foreclosure, only to find out later that their homes are being foreclosed on and the company pocketed the cash. If you're struggling with your mortgage payments, the best first step is to contact your lender and ask about a new repayment schedule. Be wary of companies touting something that may seem too good to be true.
Mortgage Scams
There are predators in every industry, and the mortgage loan lending industry is no different. Mortgage loan scams abound, so be aware! Scammers will:
- advertise low-interest rates that aren't actually available
- forget to inform buyers of high closing costs associated with their mortgage loans
- steer buyers toward a more expensive loan with higher closing costs although they qualify for a loan with better terms
- offer adjustable-rate mortgages but fail to inform buyers that the rates can increase or fluctuate in the future
- and even offer negative-amortization loans (these loans are illegal in most of the U.S. and result in a loan's principal balance increasing over time rather than decreasing)
If you or someone you know is thinking of Buying a home and looking at mortgages, know the signs of a possible scam and look up company reviews before you take any next steps.
Fake Lawsuits & Forensic Audit Scams
When you buy a home, you want to believe you're not going to get taken advantage of, but many fall prey to dishonest people targeting homeowners. Fake lawsuits are those lawsuits that promise to 'sue greedy banks' on behalf of homeowners. Many times, the lawsuits are fake, and the homeowner can be out thousands of dollars and many month's worth of time. Be wary of anyone touting a lawsuit, especially when your home or mortgage are concerned.
Another scam not easy to recognize is a forensic audit scam. This scam is focused on making the homeowner believe there are flaws in the mortgage document that could lead to an affordable modification or even nullify the mortgage loan. When it comes to this scam, check the background and references of anyone claiming to be a forensic loan 'auditor,' 'mortgage loan auditor,' or 'foreclosure prevention auditor.'
There will always be people looking to take advantage of others, especially when economies are struggling and people are desperate. If you're a homeowner, don't fall prey to a scam. Ask as many questions as possible. Research everything you can. Talk to your agent for more information. If you're applying for a mortgage loan, get multiple quotes. And remember, if something seems too good to be true, it probably is.
As your agent, I am your valuable asset in all things real estate. Reach out to me with any questions you may have about buying or selling. If you're getting contacted about things that seem too good to be true, reach out to me for more information: 734-996-0000 You can also contact me via my website: www.TheRealtyTour.com Don't hesitate to reach out!
Tom Stachler is a real estate broker working in the Saline, Ann Arbor, Ypsilanti, Milan, Dexter and surrounding markets. Listing and selling homes, condos, commercial spaces, income properties and other style houses. Experience with over 30 years in the business.
