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Mortgage Scams: Homeowner Beware!

March 31, 2022

FHA Loans

Have you been contacted by a third party offering to refinance your FHA home loan? During the worst of the COVID-19 outbreak, there were reports about home loan scammers trying to trick people into applying for refinance loans, mortgage relief, and foreclosure avoidance measures that weren’t what they were advertised to be.

Some fell prey to these scams, while others relied on “best practices” to help them avoid being fooled into thinking they might be dealing with a legitimate third party offering help. 

What are these best practices and how can you save your home from loan default and/or foreclosure or simply refinance your existing home loan without getting swindled?

The first key is the nature of the contact with you, the homeowner. Did you initiate it or did it come uninvited? Any unsolicited contact whether by phone, text, e-mail, U.S. mail, social media, or any other method should be viewed with extreme skepticism.

The second warning sign to look out for? High-pressure tactics. It’s best never to respond to any attempt to get you to sign, click through, or download ANYTHING. And doubly so when hundreds of thousands of dollars are potentially on the line.

And then there’s the substance of the communication. Have you been contacted by someone who called you about a “special offer” but the caller seems barely literate about the home loan process? 

This may happen when they are directly asked a technical detail like whether a hybrid ARM loan is available or whether you’ll be required to pay an annual or monthly mortgage insurance premium.

And beware of poorly worded or badly spelled text in written communication. Real lending professionals do not send such material; banks have marketing departments and oversight.

Bad spelling isn’t just unprofessional, it’s a warning that you might not be dealing with who you think you are. 

Don’t look any further on such offers, it’s typically a waste of time.

Any refinance loan offer related to a government-backed mortgage like an FHA home loan that includes the ability to “skip payments” should be avoided at all costs.

Government-backed mortgages typically do NOT permit the borrower to skip payments. 

Those payments will either be made in the regular fashion or the refinance loan will otherwise require the mortgage to be brought current as a condition of loan approval. Skipping a payment isn’t an option for an FHA loan and you should not trust any third party who tries to convince you that it IS an option.

Remember, if you have doubts about any home loan offer, it’s best to move on and report any attempted scam to the Federal Trade Commission at 1-877-382-4357. You should also report it to your State Attorney General.

Joe Wallace - Staff Writer

By Joe Wallace

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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