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Mortgage Fraud
Author David Schneider | Dec 09,2007
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Mortgage fraud comes in several forms. First, it can occur when companies charge a large upfront fee for mortgage applications and then fail to come through with a loan. Secondly, it can occur when mortgage companies that target normally hard to finance applicants charge excessive fees and interest rates. To avoid being victimized by one of these forms of mortgage fraud, you need to learn more about each one.
Mortgage Fraud -- Hit and Run
The first type of mortgage fraud is the hit and run scam. In this scam, a company targets hard to finance people such as the elderly, people with limited credit, people with less than perfect credit or people who are self employed. They charge huge upfront application fees to cover “administrative expenses” or “loan searches.” After the fee has been charged, the company tells the applicant that they will process their application and look for a lender who is willing to work with them. After a week or two, the company tells the applicant that their application has been turned down. However, their fee is not refunded. The company justifies their retention of the fee by saying that it was a service fee and they performed their service, regardless of the outcome.
Mortgage Fraud -- Too Expensive
Another mortgage scam involves charging excessive fees and extra high interest rates. While mortgage companies are free to charge any interest rate that they want, there is a reasonable limit to this freedom. When looking at an alternative lender, or when working with a mortgage broker, it is important to evaluate what fees they are charging and it is important to compare those fees against normal fees charged by traditional lenders. This will help you to determine if you are being scammed or if the company is operating within reasonable limits.
Mortgage fraud comes in several forms. First, it can occur when companies charge a large upfront fee for mortgage applications and then fail to come through with a loan. Secondly, it can occur when mortgage companies that target normally hard to finance applicants charge excessive fees and interest rates. To avoid being victimized by one of these forms of mortgage fraud, you need to learn more about each one.
Mortgage Fraud -- Hit and Run
The first type of mortgage fraud is the hit and run scam. In this scam, a company targets hard to finance people such as the elderly, people with limited credit, people with less than perfect credit or people who are self employed. They charge huge upfront application fees to cover “administrative expenses” or “loan searches.” After the fee has been charged, the company tells the applicant that they will process their application and look for a lender who is willing to work with them. After a week or two, the company tells the applicant that their application has been turned down. However, their fee is not refunded. The company justifies their retention of the fee by saying that it was a service fee and they performed their service, regardless of the outcome.
Mortgage Fraud -- Too Expensive
Another mortgage scam involves charging excessive fees and extra high interest rates. While mortgage companies are free to charge any interest rate that they want, there is a reasonable limit to this freedom. When looking at an alternative lender, or when working with a mortgage broker, it is important to evaluate what fees they are charging and it is important to compare those fees against normal fees charged by traditional lenders. This will help you to determine if you are being scammed or if the company is operating within reasonable limits. |
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