You can help to keep yourself out of harms way of these predators by preparing & educating yourself. My goal is to teach clients as much as possible, so I’ve constructed the TOP 10 MORTGAGE SCAMS YOU NEED TO KNOW! Hopefully this will act as a helpful tool in preventing predatory lenders from attacking you!

#1 Mortgage Scam :: Your Mortgage Consultant Does NOT KNOW what is best for you!

You have to make your own decisions. It is their job to assess your needs, and then offer what they think is your best option. Ultimately, it is your job to know if you can agree with what their suggestions are. You need to make sure YOU ask questions and assess your own needs. The clients who are open and honest are the ones that will truly get the best mortgage for their needs.

#2 Mortgage Scam :: BAD Mortgage Consultants will make people feel like they aren’t smart enough to know the details of their own mortgage.

This is 100% False! People need to know everything about their mortgage, and if you feel like you are missing the big picture of your mortgage, you’re probably right. If they can’t spell it out to you, then there is a problem.

#3 Mortgage Scam :: BAD Mortgage Companies allow people to LIE about their income!!!

Some mortgage consultants even encourage it! They are selfishly considering their fees in the meantime. As a result, families cannot even afford their own mortgage payment. I help many people who are in this unfortunate, terrible situation. The stress of the aftermath to these families is not nearly worth it. People are losing their homes because of it. This Mortgage industry shouldn’t allow this to happen.

#4 Mortgage Scam :: BAD Mortgage Companies charge “Points” to “Buy-Down” your rate.

While this happens every day, most of the time loan officers are just padding their fees to compensate. In order to check this, look at the “Loan-Discount” line on the GFE where the fee is supposed to be for this; that number needs to be here, otherwise it’s a pseudo fee.

#5 Mortgage Scam :: Mortgage Companies offering “No Closing Costs” are padding your rate to make up for it!

This is just a marketing scam! We don’t do this because we want you to know exactly what you are paying for. With every mortgage, 4 companies are involved in getting it closed. It’s just crazy to think that the independent Appraiser, the independent Title Company, the independent Lender, and independent Broker, all work together AND aren’t charging closing costs! Somebody’s pocketing it.

The “no-cost” closings usually make sense if you are planning on having your mortgage for six months or a year total. The extra interest that you would be scheduled to pay adds up and could’ve covered the closing costs in the first place & given you a lower interest rate. But instead, you are now stuck with high payments forever that wash out the closing costs. You end up paying MORE in the end as a result.

#6 Mortgage Scam :: Bad Mortgage Companies will offer you a short term ARM.

This “ARM” could adjust in as little as six months to two years. TODAY, “Arm” is a BAD word. Regardless of what kind of “ARM” it is, THEY ALWAYS ADJUST UP. Some mortgage lenders will tell you “Well, it could adjust up or down, depending on the market.” This is not the case at all! As a standard, arms will adjust up to 2% immediately once it is due, and then continue up another 1% every six months thereafter. They generally cap around 11% - 14% depending on how they feel.

This “ARM” seemed to be the only option for people with poor credit. Mortgage Companies have had to find a new program to counter the “Arm”. Ask your lender about an FHA Program. If they don’t offer FHA, find a different mortgage company.

#7 Mortgage Scam :: BAD Mortgage Companies will Over-Appraise your home.

This ONLY Benefits the LENDER, NOT YOU. Although this can seem like it’s to your benefit at the time and allows you to pay off debt and get some cash-out, the outcome is very negative. The facts is, this “Strips” away your equity and can put you in a terrible situation , especially if you chose to be on an “ARM.” Don’t be fooled by the 110% loan, or the 115% home loan.

#8 Mortgage Scam :: Bad Mortgage Companies will CONVINCE people to refinance even when there is no need.

Using high pressure tactics is only a way for them to abuse your innocence. If you are at a decent rate, don’t let them talk you into refinancing just to pay off a couple credit cards and car loan… In most cases, your car loan will be paid off in 2-3 years, and a mortgage will be drug out another 20-30 years with interest on top of interest! Use your common sense when finding the right mortgage company!

#9 Mortgage Scam :: Bad Mortgage Companies change their closing costs.

Always make a copy of your original GFE (Good Faith Estimate)! You need to do this for yourself to be prudent. If your mortgage consultant comes back with, “What you don’t trust me?” You’ve got your answer. Thank God you asked for it. You and your family matter more than that & you need to read the fine print! People are losing their homes because they “just didn’t see it”. Your closing costs shouldn’t change much at all. Sure, there are times when the Title Insurance or Lender’s Underwriting Fee are a little off, but your Mortgage Broker Fee and Loan Origination Fee SHOULD NEVER CHANGE (these are the most common fees to change with BAD Mortgage Companies).

#10 Don’t SCAM Yourself! Don't Sign Unless YOU can SPELL-OUT your Mortgage details alone.

Before you sign, tell someone the details of your mortgage and answer their questions. If you cannot do this competently, you should not be signing! By doing this exercise, you may discover:
A. You have more questions or need clarification or ,
B. You are confident and secure in your mortgage decision – Congratulations!

What it all comes down to:
The FBI says Mortgage Fraud is Becoming The Fastest-Growing Crime in America!

If you aren’t completely embarrassed by all of the questions that you’re asking your Mortgage Consultant, then you’re not doing a responsible job for you and your family!