Mortgage Scams Rising
Headlines about mortgage fraud have been much in evidence recently. Some have concerned alleged wrongdoing among some Goldman Sachs executives. But others have reported the activities of low-life predators who feed on the misery, and desperation of individual homeowners.
The LexisNexis® Mortgage Asset Research Institute published a study April 26. In a statement, Jennifer Butts, a co-author of the report, explained its significance:
"The data suggests that in 2009 there was a 7% increase in the number of incidents of fraud reported to the LexisNexis Mortgage Asset Research Institute on top of the 26% increase reported in 2008. While this is a noticeable increase, we believe that mortgage fraud is significantly understated, even during times of massive origination volumes."
Home Refinance Rates Tempt Some
The Lawyers' Committee for Civil Rights Under Law, a nonpartisan, nonprofit organization, publishes extensive guidance for homeowners at its Prevent Loan Scams Web site. It lists the six most common types of mortgage loan fraud:
- Phantom Foreclosure Counseling
- Sale/Lease-Back or Repurchase Scams
- "Bait and Switch" Scams
- Fraudulent Modification
- Bankruptcy Foreclosure
- Reverse Mortgage Fraud
Some of these involve refinancing cons. They are particularly attractive at the moment because home refinance rates are very low right now, and many--especially those with adjustable-rate mortgages that are due to be reset--are keen to keep their monthly payments as low as possible.
The Federal Reserve publishes five tips that it says can help homeowners to avoid foreclosure scams. Some of them may also help with refinancing, and other mortgage loan cons.
- Work with a non-profit HUD-approved counselor
- Don't pay big fees--these shouldn't total hundreds, let alone thousands
- "Guarantees" are red flags--nobody can give guarantees. Be wary of those who say they can
- Understand everything you sign--take nothing on trust, and retain an attorney to check anything that could transfer the title of your home
- Follow your gut--if you become suspicious, seek help. Check with your state and local consumer protection agencies
Best Mortgage Rates for Refinancing
According to Fannie Mae:
The best protection against predatory lending and mortgage fraud is to shop around for a mortgage. Ask questions and get explanations so that you have a complete understanding of the home loan. Be sure you know the total borrowing cost over the life of the mortgage.
If you're thinking of refinancing, you can begin to shop around--and find some of the best mortgage rates--here.