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What are some common mortgage scams?

For homeowners in Rhode Island, foreclosure can be a scary prospect. That’s why many scam artists prey on people facing foreclosure by offering methods of preventing it. To ensure you can recognize common scams and take the proper steps to avoid them, the Federal Trade Commission offers the following information.

Forensic loan audits

Be wary of any offers from so-called forensic loan auditors. This scam involves an offer to review your mortgage documents to determine whether there was any wrongdoing on behalf of the lender. You’ll be charged a fee for this service and will be issued a report with the auditor’s findings. While it’s claimed that this report will give you more leverage when negotiating with your lender, this is rarely the case.

Mortgage loan counseling

In some cases, it’s possible to work with your lender to either reduce the number of mortgage payments or renegotiate the principle. A fraudulent mortgage loan counselor will offer to do this on your behalf, usually for a hefty a fee. After the fee is paid the person or company may disappear altogether or demand you make mortgage payments to them until the matter is settled. Never make any payments to anyone other than your lender and never accept unsolicited help, especially when there is a fee involved. 

Rent-to-buy offers

Rent-to-buy is a convoluted scam that entails selling your home to a new owner and subsequently renting from that person. The idea is that you’ll continue to rent the home until your financial situation improves, at which time you can buy it back. For most people, that time never comes. The new owner will either make buy-back too expensive or continually raise the rent until you’re forced to move.

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