Avoiding Mortgage Lender Scams In 2017
Mortgage scams are far too common again. What do real estate investors need to watch out for now?
There are significant threats from mortgage scams in 2017. Some are old classics, and others are new. Investors need to educate themselves, be on the alert, and skillfully avoid them, if they are going to keep growing their finances. Here are some of the common ones to be on the lookout for today.
ID & Wire Theft
One of the biggest threats today is identity theft. This can be a result of the recent Equifax hack, or perpetrated through email phishing scams. Criminals may try to take out loans in your name, redirect funds that are supposed to go to closing, or hijack bank accounts, and clear them out. It is important to keep an eye on your money and credit, and to double verify any wire instructions, before sending money.
Upfront Fees with No Closing
Some inexperienced loan officers and bankers are just bad at processing and closing loans. Others may be making big sums by charging upfront fees, and never delivering a loan. Either way, it gets expensive fast. Make sure you are working with a lender who is a good match, and has a good ratio of applications to funded deals.
Bait & Switch
Bait and switch scams are some of the oldest, and most aggravating. Lenders reel in borrowers by underquoting them on rates and fees, and then when they know the borrower has little choice, is worn down, or will lose more money by not closing, hikes those rates and fees at the last minute. Make sure you know what the final terms are before you go to the closing.
Broker Chains
WHile not technically a scam, it can be when presented wrong. Many new sites and lenders are popping up, claiming to be direct lenders with lots of their own capital. Many simply plan to send your deal to another mortgage broker, or shop it on various crowdfunding platforms and get others to fund your deal. They may have no money to lend, and no influence in the process. This can be highly frustrating to borrowers who have to deal with many parties to get their loan underwritten, or who are given the runaround for weeks or months, before the deal falls apart.
Insurance Scams
Leading up to the foreclosure crisis forced placed insurance scams by lenders and loan servicers put many property owners into default, or cost them thousands of dollars on individual properties. With 2017’s record setting storm activity many may also be finding lenders trying to hold onto their insurance claim checks. If there are two counter signatures required for a check to be cashed, lenders may try to keep that money, and find a way to apply it to your loan, instead of providing you the funds needed for repairs. Have the lender sign first, and send you the check.
