Home Loans

Avoiding Home Loan and Mortgage Relief Scams

From a young age we’re told a key part of the Great American Dream is home ownership. Sadly not many of us have 6,7 or 8 figure chunks of change in our checking account – and so to buy a home we need to take out a home loan or mortgage.

Banks and other home loan companies are happy because they have a solid immovable piece of collateral against your debt, and for the most part all is well with the world. That is until somebody in the system gets greedy.

From deceptive mortgage ads, home equity loans and credit lines or reverse mortgages, where large sums are involved or fat broker commissions to be earned there’s always a scam risk.

Sometimes it’s the lenders, sometimes it’s us – and usually both. As is now common knowledge our once trusted banks played a huge part in the great crash of 2008 where a combination of greed, slack trading practices and the US consumer’s willingness to overstate income when applying for so-called “Liar’s loans” helped the property market to implode, taking banks and millions of home owners with it.

Or for those of us left with a home we can no longer afford due to a change in circumstances (or perhaps with a liar’s loan we could never afford) we are opening ourselves up to a whole new breed of scammer targeting our desperation to keep our home despite being faced with impending foreclosure.

Mortgage Relief Scams claim to be able to reduce payments and take steps to save your home. They make big claims, promise legal help, suggest they are affiliated to the banks and guarantee results – for an up-front fee.

Unfortunately, many companies use half-truths and even outright lies to sell their services. They promise relief, but don’t deliver. In fact, many of these companies leave their homeowner customers in worse financial shape than they were at the start – in more debt and still facing foreclosure.

The FTC have brought scores of law enforcement actions against these scam companies and have put a law in place, specifically to help consumers facing these issues.

The Mortgage Assistance Relief Services (MARS) Rule (also known as Regulation O) makes it illegal for companies to collect any fees until a homeowner has actually received an offer of relief from his or her lender and accepted it.

Despite this, unfortunately the problem continues and we receive a number of reports every month from consumers who are still facing hard selling tactics, rip-off up-front fees and false claims.

So how can you protect yourself when looking for a home loan or mortgage relief?

• When you are comparing offers, use the Internet to learn about the reputation of the loan or service providers. Only use legitimate and trusted companies, such as those we list above.
• Do not deal with companies who call you – be the one to reach out to the company.
• Check a company’s credentials at the BBB and with your local Chamber of Commerce if they are in-state.
• Read online reviews – is there a pattern of complaints with the company concerned?

And most importantly, if they ask for any money up front while making big promises to reduce payments and save your home – walk away.