How to Spot and Avoid Common Mortgage Scams

How to Spot & Avoid Mortgage Scams:

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List of Mortgage Scams:
Foreclosure Relief Scams: Scammers promise to negotiate with your lender to modify your loan or save your home from foreclosure, usually demanding high fees upfront and then disappearing.

Loan Modification Scams: Similar to foreclosure relief but specifically aimed at adjusting your current loan terms, with scammers often posing as legal or counseling services.

Bait-and-Switch Schemes: Lenders or brokers may offer attractive terms to get you to apply, then switch to less favorable terms at the time of signing.

Equity Skimming: An investor may use a straw buyer, false income documents, and fake credit reports to obtain a mortgage loan in the straw buyer’s name, then rent out the home without repaying the loan.

Property Flipping: While not always illegal, this becomes a scam when done by falsifying appraisal information or inflating the value of the property.

Reverse Mortgage Scams: Targeting seniors, these scams might involve offers for free homes, investment opportunities, or foreclosure or refinance assistance.

Rent-to-Own Scams: Scammers make a false claim to own a property, then trick potential tenants into making rent payments in exchange for the future option to buy.

Loan Flipping: Predatory lenders refinance homeowners' loans multiple times, charging high fees and points with each transaction but providing no real benefits.

Phantom Help Scams: Charging fees to fill out the same mortgage assistance forms available for free from your lender or government websites.

Mortgage Servicing Scams: Offering fake mortgage servicing transfers and then accepting payments that do not go to the actual mortgage.

Upfront Fee Scams: Asking homeowners to pay fees upfront for mortgage assistance or modification services, often leading to no services rendered.

Fake "Government-Backed" Modifications: Impersonating federal programs or agencies to offer fake mortgage modifications and charging illegal fees.

Home Improvement Scams: Contractors who use a homeowner's property as collateral on a loan and then fail to complete any significant improvements.

Illegal Property Flipping with Inflated Appraisals: Purchase properties, artificially inflate their worth through false appraisals, and sell them quickly at inflated prices.

Mortgage Elimination Scams: Claims to eliminate a homeowner’s mortgage by creating a new contract or identifying loopholes in the mortgage contract.

Cash-Back Schemes: Offering a homeowner a cash-back deal, which often involves inflating the value of the home, only for the scammer to pull out the cash and disappear.

Balloon Payment Scams: Misleading the buyer about the terms of a mortgage, particularly the presence of a large balloon payment at the end of the loan term.

Document Forgery: Forging the homeowner’s signature on deed documents or loan agreements to steal the property or equity.

Escrow Fraud: Scammers posing as real estate agents or attorneys siphon off funds meant for escrow accounts during the property transaction.

Credit Cleanse Scams: Promising to clean or fix your credit in order to qualify you for a mortgage, often using illegal tactics that don’t result in improved credit.

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