October 10, 2014

Top 3 Mortgage Loan Scams to Avoid

Lenders have become strict in terms of mortgage loans, so borrowers have no choice but to opt for non-traditional funding sources. Because of this, there are already a lot of scams that have emerged and these usually target the desperate borrowers. If you were not able to avoid these scams, you can experience different problems later on. These problems include criminal charges, your home being foreclosed and fines being levied.

If you are planning to apply for a mortgage loan, make sure that you are aware of the scams that are currently circulating. Knowledge about these can protect you in the long run.

So what are these modern-day loan scams that you should avoid?

The Loan Modification Scam

Homeowners who are nearing foreclosure usually find relief on a loan modification offer. This is because lenders usually promise them good things in exchange of an up-front fee. What these homeowners don’t know is that this particular practice is actually illegal under the rule of the Federal Trade Commission’s Mortgage Assistance Relief Services. Lawyers have the right to ask for fees as long as they meet the FTC requirements. However, scammers usually have their own people who are posing as lawyers for them to ask for fees.

The Fraudulent Application

It is illegal to provide false information when applying for mortgage and other types of loans. What if you are not aware of this? The chance of this happening is little because of the strict lending policies now. However, there are some instances when a real estate broker is really eager to sell that he/she will still push the loan using false information.

To avoid future problems, it is important that you keep all your financial documents. You can show them to law officers so you won’t be liable for the falsification.

Also, when your loan was approved because of the false documents, you might be able to qualify for a mortgage that you can’t really pay. This will result to foreclosure in the long run.

The Rent-to-Buy Scam

In this case, the lender allows the borrower to stay in the lenders home and then the lender will hand the house over to the borrower. The borrower then becomes a renter. The lender actually leads the borrower to the notion that he will be able to own the home after some time. However, when that time comes, the terms have already been set to unreachable cost that he won’t be able to afford it with his current income level.

Make sure you avoid these scams. And, if you want to get a free quote regarding the loan you want to obtain, don’t hesitate to contact us at (619) 692-3630.

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