Three Common Mortgage Scams and How They Rip You Off
Image lovemoney.com

Three Common Mortgage Scams and How They Rip You Off

Have you been the victim of a mortgage scam? Have you heard of someone who has been a victim? Here are three common mortgage scams and how they work so you can know what to look for if it ever happens to you.

With the mortgage market such a volatile issue for many homebuyers, some people will get desperate to purchase a home even if it means doing it in a  non-traditional way. Unfortunately, most of these non-traditional routes for buying a home are scams and they can cost you thousands of dollars. Before you jump into anything that could wipe out your life savings, here are three main mortgage scams you should know about so you can avoid them if you see them coming your way.

1.     Equity Stripping
This scam is played on people who have already built up some equity in their home and they have fallen into financial trouble which makes it difficult for them to make their payments. What happens is that the con artist convinces the homeowner to sign the title of the property over to them and they will, in turn, make the payments on the house. The scammer tells the homeowner that they can still stay in the home and pay rent. The scammer also tells the homeowner that they can buy the home back once they are financially secure once again.

Unfortunately, the scammers in these situations only drain the house of any equity that the homeowner has accumulated. More often than not, the homeowner is never able to buy the home back and they end up losing the house.

2.     Phantom Help
With this scam, the scammer offers to “rescue” the homeowner from their mortgage mess by acting on their behalf and offering to make phone calls and do paperwork. While this sounds like a good idea, the scammer typically charges outrageous fees for this kind of work and the homeowner could do the exact same thing themselves. In addition, the scammer tells the homeowner to ignore any phone calls from the mortgage lender or any of the lender’s agents. This is because the scammer, in actuality, does nothing to help the homeowner and the property almost always ends up in foreclosure. By this time, it is too late for the homeowner to do anything about it and they often lose their home as a result.

3.     The Old Bait and Switch
This is one of the oldest scams in the book and many con artists have perfected this scam to get thousands of dollars from people. What happens is this: The scammers pose as housing counselors who want to help the troubled homeowner get out of their financial trouble with their mortgage. They have the homeowner sign a bunch of paperwork that supposedly gives them lower mortgage rates, lowered principal balances or some other help that will make their monthly payments more affordable. But the homeowner is actually signing ownership of their home over to the scammer.

The worst part about this scam is that the homeowner still owes the money for their mortgage loan but the scammer now owns the home.

These are three of the more common  mortgage scams that have been going on for many years. In our next post, we will tell you some ways you can avoid becoming a victim of these scams so you don’t lose your home to a con artist.

Your code to embed this article on your website* :

*You are allowed to change only styles on the code of this iframe.

Comments

Add your Comment

Featured - 30 Year Fixed Mortgage Rates 2019

Lender APR Rate (%) Points Fees Monthly
Payment
Learn More
Rocket Mortgage
NMLS ID: 3030
4.875% 4.875% 0.00 $0 $1,324 Learn More
AimLoan.com
NMLS ID: 2890
License#: MC-3098
3.625% 3.625% 0.00 ($88) $1,141 Learn More
First Internet Bank
NMLS ID: 424182
3.633% 3.625% 0.13 $255 $1,141 Learn More