Avoid Loan Scams
Anyone can fall victim to a scammer. For those facing foreclosure, the consequences can not only lose money, but their homes as well. The best way to avoid loan scams is to know how to recognize one.
People of all races, genders, education, and income levels can become victims of scams.
There are many different types of scams. A few common ones are:
- Phony/Phantom Help — You pay a fee to the scammer to assist you in modifying your loan and they do little or nothing to help get the loan modification. They disappear with your money.
- Forensic Audits — In exchange for a fee, scammers offer you a review of your documents by “expert auditors” to identify lender noncompliance with the law and claim you can use the reports to speed up your loan modification, reduce what you owe, or even cancel your loan.
- Rent to Buy Schemes — The scammer requires you to surrender your home title and they will allow you to stay in the home as a renter until you can buy it back. This typically results in an impossible buy back.
- Bait & Switch — Scammers give you papers to sign for a loan to bring the mortgage current, but buried in the papers is a document that surrenders your home title to them.
These are red flags that can indicate a scam:
- Guarantee to stop your foreclosure or get you a loan modification.
- Require a fee in advance before providing any services.
- Use pressure tactics such as pushing you to do things very quickly.
- Promise to find mistakes in loan documents to force the lender to modify the loan.
- Advise you to stop making payments or talking to your lender.
- Advise you to make mortgage payments directly to them rather than your lender.
- Advise you to transfer your home title into their name so they can make payments.
- Advise you to submit fraudulent information to your lender.
Use these services to file a complaint or report a scammer:
There are a lot of honest, good lenders. But there are also dishonest lenders who take advantage of people with money or credit troubles with hidden fees, bad rates, or other costly tricks. Don’t feel embarrassed or stupid if you find yourself in a situation with a scammer or a bad loan. If you feel uneasy at all, or it sounds too good to be true, no matter what they say to you, step back and contact HOME for help and advice.