For as long as there is money to be made, people will be scamming. Considering the kind of cash that exchanges hands in home mortgages, it should come as no surprise to learn that mortgage scams have a long and not-so-glorious record. From borrowers to lenders, scam artists have targeted all parties involved in mortgages ever since the concepts were invented. Sometimes fraud can be done to both borrower and lender at the same time!
Here are some examples of the mortgage scams that target homeowners:
1. Change of Lender
Lenders can sell mortgages to other financial institutions. However, both financial institutions are required to send a letter to the homeowner informing him or her about the change of lender. Confirming the existence of both letters ensures that the homeowner cannot be fooled using one of the simpler scams on record, where the scam artist claims to have purchased the mortgage. Homeowners who receive such letters should never fail to confirm the purchase with their lenders using contact information secured on previous occasions.
2. Foreclosure Fraud
Even more audacious than the last, most examples of foreclosure fraud see scam artists exploiting homeowners whose homes are in foreclosure. In short, scam artists promise to help beleaguered homeowners using debt consolidation programs, pocket the cash paid to them, and ignore the bills until the lenders come collecting. In some cases, these scam artists even attempt to get the homeowners to sign ownership of the homes over to them.
3. Reverse Mortgage
Scam artists tend to be opportunistic, meaning that seniors often become targets because of both their increased savings and their diminished capabilities. Lines of credit called reverse mortgages that borrow using the home’s value are a popular means for scam artists to defraud said individuals. Scam artists can use reverse mortgage schemes to steal homes, steal loans, and set up senior as straw borrowers.
4. Title Fraud
Title fraud can be considered a catch-all term for a number of schemes involving fraudulent exchanges of ownership. One of the most common example is were the scam artist steals the homeowner’s personal information and then uses the information to carry out a number of potential schemes. Examples range from borrowing in the homeowner’s name to selling the home to someone else. Homeowners who have their homes sold to others can get bogged down in extensive legal battles.
5. Upfront Fees
This particular scheme is similar to the above example. Scam artists use promises of better interest rates and other incentives to persuade homeowners to sign up for refinancing. However, these scam artists convince homeowners to pay upfront fees in order to seize the promised opportunities. Once these scam artists pocket the cash, they might then use the stolen information to carry out title fraud.