How to Spot a Mortgage Scam

Thursday, March 15, 2012

While the landmark $25 billion National Mortgage Settlement was just announced last month, scammers have wasted no time capitalizing on the vulnerability of desperate homeowners.

The settlement with the nation’s five largest mortgage servicers was signed by federal and state officials Feb. 9, and will provide assistance for homeowners in order to compensate for the faulty foreclosure practices offered by mortgage servicers following the housing market crash. According to the nonprofit credit-counseling agency Money Management International (MMI), although real compensation is still months away, there have already been numerous reports of scam operations popping up across the country.

“While the government has been cracking down on foreclosure scams, it is important for you to remain diligent in keeping your personal information safe,” advises Jo Kerstetter, vice president of education and community relations for MMI.

Kerstetter offers the following tips to help avoid a scam:

  • Don’t panic. Mortgage scams are effective because the scammer is able to exploit the fear of a person who is in a desperate, vulnerable state. Don’t let fear cause you to make irrational decisions.
  • Never act under pressure. Don’t sign a contract or disclose information before doing your research. You can always request to receive any information in writing.
  • Trust your gut. If someone is offering you something that sounds too good to be true, it probably is.
  • Stay informed. Make sure you obtain detailed information about your foreclosure deadlines. If you want to know if you qualify under the Settlement, contact your bank or loan servicer directly.
  • Don’t release any personal financial information. If you are contacted by someone who claims to be from your financial institution and wants you to “confirm” or help them identify your personal account information, it is likely a scam. Rather than releasing information, ask for their contact information and tell them you’re going to call them back.
  • There is no fee involved in the National Mortgage Settlement. If you are contacted in any way from someone asking for money in return for a speedy settlement payment, they are scamming you.

For more information about mortgage assistance relief scams, visit FTC.gov. If you have questions or concerns about your mortgage loan, consider meeting with a HUD-certified housing counselor to discuss your options.

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