Mortgage Refinance Scams

For a home owner going through fiscal difficulties, re-financing could cause difficulty. While the majority of creditors operate honestly, there are also predatory lenders on the market who don’t care one way or another regarding you and won’t hesitate to try and rip you off. It’s often a good idea to remain on guard, even if you believe you’ve discovered a trusted loan officer because they’ll have lots of opportunities to take advantage of anyone during the entire mortgage process. The best way to protect you is to first become experienced in possible questionable practices. Loan steering is one such tactic that homeowners in turmoil need to look out for.

Loan Steering

It’s easy to call this the four R’s—reject, refer, refinance, regret. That is when a bank or other mortgage lender informs a qualified borrower that they’re not qualified for a loan from their particular loan company. They may inform you of it’s as a result of your earnings, history of credit, or a plethora of other excuses. For some predatory loan companies, it is usually a routine process, or just the work of a single dishonest member of staff at a reputable mortgage lender. Either way, the “trusted” loan officer refers you to a “friend” with another company who might be able to “help. ”

Embarrassingly, you unwillingly talk with the brand new mortgage officer, but the terms of the loan aren’t so great. The interest rate is much higher than what most mainstream loan companies are offering, and the list of fees is infinite. Preying on your feelings, the financial institution has the advantage because you’re so disappointed about being rejected and fear even more of the identical from yet another financial institution. After you think about it for a day, you begin receiving message or calls from the loan provider telling you it’s a great deal for someone in your financial predicament and they’ll make it as easy as possible for you.

At this point, other scams can easily enter into play:

• Hostile and high pressure sales
• Encouraging a cash-out refinance to settle debts, burning a person of equity
• Moving closing costs into the mortgage loan, increasing monthly payments
• Advising to refinance once again, at a later time, to secure a much better deal.

Part of the fraud is that the two loan officers from the various lending institutions know each other and are partners inside their con. The first one made some funds from the second one for the recommendation.

As you will see, those people who are in dire need of money can certainly become the victim of mortgage refinancing frauds. Don’t become quickly fooled by offers of easy cash. Prevention is the greatest defense—take your time, use caution, research the organization, and remember—don’t sign anything at all prior to having the opportunity to examine and fully grasp all the documents.