Owning your own home is an integral part of the American dream, but it doesn’t always work out as well in real life. If you’re having trouble making your mortgage payments or are facing foreclosure, you’ve likely wondered about refinancing or loan modification options. While there are some organizations that can provide legitimate help, there are also many scam companies operating around the country, including in the Houston, Texas, area. Read on to discover five major warning signs that indicate you’re dealing with possible mortgage loan fraud.
- It sounds too good to be true.
Any time a company starts making unrealistic promises about what it can do, beware. Unscrupulous companies may guarantee they can stop foreclosure proceedings on your home or grant a loan modification, but this is usually part of the scam to get you hooked. Real loan modification companies won’t make any promises or guarantees.
- You have to pay a fee.
If you’re talking to someone about your mortgage, and they want you to pay upfront, it’s likely a scam. According to the Federal Trade Commission (FTC) Mortgage Assistance Relief Service (MARS) Rule, this is actually against the law. A company cannot charge or collect any monies in advance for services related to refinancing, modifying or reinstating your mortgage, and this includes charging to talk with your lender on your behalf. The only exception to this is for attorneys who meet specific requirements, and they must put the money directly into a client trust account.
- You found out about it through some type of advertising.
If the company or person found you instead of the other way around, it’s best to pass. This includes offers in magazines, newspapers, online postings and any other kind of advertisements as well as unsolicited phone calls and mailings. Companies that use this tactic often try to get you to provide personal information prematurely. To protect yourself, never provide identifying information, including bank account numbers, to anybody you didn’t contact or haven’t verified is a legitimate business.
- You have to sign over your title or sign a contract.
Pressuring you into signing over the title to your home is one of the main ways scam companies trick you. This is because signing over the title does not automatically stop the foreclosure. These companies/agents often also try to get you to sign the paperwork quickly without reading it over or understanding it thoroughly. They may assure you that it’s just the “usual” stuff or tell you that “It’s no big deal.” However, any time you sign a document, you are taking a chance. To make sure you’re covered, have an attorney or legitimate housing counselor look over the paperwork before you sign.
- You have to stop or redirect your payments.
If a company tells you to stop paying your mortgage, run away quickly. Not making your payments does not make it easier to get a modification or refinancing and can do serious long-term damage to your credit. A reputable company will also never ask you to make your mortgage payments to them instead.
Think you’ve already been the victim of mortgage fraud? The first step is to report the possible scam to the proper state and federal agencies. You’ll also want to talk to a knowledgeable real estate lawyer to help you get more information on your options moving forward.
Susan J. Taylor is a Houston-based commercial litigation and business law attorney. She began practicing law in Texas in 1985 with a primary concentration in business, real estate, and commercial litigation. Ms. Taylor is Board Certified in Civil Trial Law by the Texas Board of Legal Specialization. For expert help with commercial litigation, business or real estate law issues, please contact The Taylor Law Group for a consultation.