How to Avoid 3 Common Mortgage Scams

When obtaining a mortgage, beware of common scams that prey on unsuspecting borrowers. Here’s how to protect yourself:

1. Foreclosure Rescue Scams

Scammers target homeowners facing foreclosure, promising to save their homes for a fee. They may ask for upfront payments or convince homeowners to sign over their property deeds, leaving them in a worse financial situation.

How to Avoid:

• Work only with reputable housing counselors or attorneys approved by the Department of Housing and Urban Development (HUD).
• Avoid companies that guarantee loan modification or foreclosure assistance for a fee.
• Never sign over your property deed without consulting legal counsel.

2. Loan Modification Scams

Scammers offer loan modification services, claiming they can negotiate better loan terms with lenders. They often charge high fees upfront but provide little to no assistance, leaving homeowners at risk of losing their homes.

How to Avoid:

• Research and verify the credentials of loan modification companies or counselors.
• Avoid companies that pressure you to sign documents or make payments before reviewing them.
• Consult with a HUD-approved housing counselor for legitimate assistance with loan modifications.

3. Equity Stripping Scams

In equity stripping scams, fraudsters target homeowners with significant equity in their homes, offering high-interest loans or refinancing options. They convince homeowners to borrow against their equity, leaving them with little or no equity and unable to afford their mortgage payments.

How to Avoid:

• Be wary of unsolicited offers for loans or refinancing, especially if they promise quick cash or no credit check.
• Consult with a trusted financial advisor before tapping into your home equity.
• Read and understand all terms and conditions of any loan or refinancing agreement before signing.

Protect yourself from mortgage scams by staying informed, conducting thorough research, and seeking guidance from trusted professionals.