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Four tips to avoid phony mortgage brokers

Posted by  on Dec 20, 2010
 

The Miami Herald paints a tragic portrait of a refinance deal gone horribly wrong. Reporter Toluse Olorunnipa documents the foreclosure on a home that once belonged to Miami Gardens resident Imogene Hall. At the tail end of the refinance boom, Hall responded to a phone call from a mortgage broker who promised her a lower mortgage rate and access to $50,000 of home equity.

Florida state investigators claim that the mortgage broker then used an unlicensed title agent to process deed transfers that effectively made Hall's home the property of a New York resident. After that, investigators claim, the parties used inflated appraisal documents to close a mortgage loan for nearly double the home's value.

By the time Hall regained ownership of her property, she was underwater by nearly double the home's potential selling price. Hall's story only gets worse, as lawyers racked up huge bills while failing to save her home from foreclosure.

You can avoid becoming a victim of mortgage fraud by following a few pieces of advice:

  • Shop rates online. While some mortgage brokers use telemarketing to solicit business, investigators note a marked increase in the number of fraud cases tied to unsolicited phone calls. Restrict your search for low refinance rates to trusted comparison sites and to lenders' own quote engines.
  • Seek mortgage quotes from reputable sources. Mortgage brokers and mortgage lenders don't just spring from nowhere. You can monitor their reputations by checking with your local Better Business Bureau and with the agency that monitors mortgage loans in your state. Even a simple search engine review will often turn up warning signs of a disreputable mortgage broker.
  • Don't sign blank paperwork. Most mortgage loan fraud cases hinge on incomplete or forged documentation. Refuse to do business with mortgage brokers who try to hustle you through complex forms without an opportunity for reviewing documents.
  • Move slowly. A recent J.D. Power study states that it takes most mortgage lenders about two months to get from application to completion on a typical home refinance deal. Fraudulent mortgage brokers often try to speed up the process, hoping their victims will respond to urgency more than to caution.

According to investigators, the drawn-out economic recovery has made more Americans vulnerable to phony mortgage brokers. Use your best judgment to avoid becoming a victim.

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