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Protect Your Future by Avoiding These Mortgage Scams

In Denver Real Estate, Mortgage Rates | on August, 18, 2012 | by | 0 Comments
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mortgage scamsMortgage fraud is a fact of life that too many unsuspecting buyers fall victim to. Though it’s impossible to quantify accurately the scope of the problem, the U.S. Federal Bureau of Investigation estimated losses from fraudulent mortgage data reached $10 billion in 2010. A Real Estate Agent in Denver will always educate you on ways to avoid becoming a victim.

Top mortgage scams to avoid

Protect yourself and your loved ones by avoiding these mortgage “scams.”

  1. real estate school denver teaches about “Equity Stripping” or “Bailout,” where a con artist steps in to “rescue” a homeowner by helping him get rid of his house. The scammer cons the homeowner into surrendering the title to the home by promising to let him stay as a renter then buy the property back when his finances improve. In the end, the homeowner who’s said “I want to Sell my home in Denver” can’t afford to buy the house back, and the scammer drains the house of all – or nearly all – of its equity.In this scam, the con artist “rescues” the homeowner by helping her get rid of the house. In one way or another, the scammer convinces (or tricks) the homeowner into surrendering the title to the house by promising that she can stay on as a renter and then buy back the house once things have been “fixed.” Ultimately, the homeowner usually loses the home anyway.
  2. Phantom Help is another scam a Real Estate Agent in Denver, CO can help you avoid. Too many people fall victim to a scammer who offers to make phone calls and process paperwork that she could’ve done herself – for free. The scammer advises the homeowner not to answer calls from her lender, and promises that he (the scammer) will represent her interests to the lender. By the time the truth comes out, the scammer is gone, the home is in foreclosure, and the homeowner is down to a negative balance in her bank account.
  3. The classic “Bait and Switch.” In this instance, the scammer impersonates a legitimate housing counselor, comes armed with loads of legal documents and a promise to solve the homeowner’s crisis. The homeowner unwittingly signs documents giving the scammer ownership, then loses his Colorado Real Estate.
  4. Too many homeowners pay money up front for services they don’t understand, yet may be suspicious of but fall for them anyway. This is something a realtor denver would never recommend. A scammer will convince a homeowner of the need for a “good faith” payment, and then give the appearance of seeing if the homeowner pre-qualifies for a loan. Never give any lender or alleged housing counselor money in advance.
  5. A Realtor in Denver also advises buyers to never give the down payment directly to the lender. A legitimate lender doesn’t want the down payment check written to them, but prefers it made out to a trust which holds the money until the buyer authorizes actual payment. The trust is always manned by a lawyer with real estate experience.

Finally, be wary of the dreaded balloon payment when it comes to Real Estate in Colorado. This isn’t necessarily a “scam” but a strategy lenders promote to keep a homeowner’s monthly payment low and not chew up all of her cash flow. This is a one-time, lump-sum payment, usually costing many thousands of dollars, that is due sometime during the life of the mortgage. If it occurs six to 12 months after the mortgage is approved, many homeowners can’t afford it and end up in foreclosure.

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