Mortgage Relief Scams: What You Need to Know

mortgage scam

If you’re in over your head on your mortgage, you may be starting to feel desperate. In these difficult times, it can be easy to see a mortgage relief scam as a lifeline to financial stability. By the time people realize the phony promises and baggage attached to these scams, it can be too late. The best way to avoid mortgage relief scams is to be informed of your rights and what warning signs to look for in a potential scam. Even if an offer looks legitimate, here are some basic precautions you can use to protect yourself against fraud.

The most important thing you can do is understand your rights as a homeowner. In 2010, the Federal Trade Commission published the Mortgage Assistance Relief Services (MARS) rule in order to protect homeowners from mortgage relief scams. This rule holds companies promising mortgage assistance accountable by prohibiting them from collecting any fees until after fulfilling their promises. This means that even if you agree to accept help from one of these companies, you don’t have to pay any money at all until you have received and accepted a written mortgage relief offer from your lender. The MARS rule also bars these companies from saying they work for the government or your lender and requires them to warn you that your lender may not agree to modify the loan.

When trying to spot a scam, a good rule of thumb is that any organization that tries to charge you a fee for mortgage counseling or loan modification is not legitimate. Other than accredited attorneys, the programs that can help struggling homeowners are almost always free. If a company asks you to pay up front or with a cashier’s check/wire transfer, it’s most likely a scam. Other red flags: if they guarantee results, pressure you to “sign now,” or attempt to cut you off from contacting your mortgage lender.

Here are some precautions you can take as a homeowner to protect yourself from mortgage relief scams:

1. Do your research.

Check to see if the establishment has a website and verify that the contact information listed matches the information you have. Make sure the business address is legitimate, and not just a P.O. box. The Better Business Bureau can also provide helpful information; more specifically if the company is associated with any known scams. Do not provide any personal information until you have taken the time to do ample research.

2. Don’t sign without reading the fine print.

Be careful what you sign. Make sure you have read the document thoroughly and understand it completely before you put pen to paper. It is very important for you to understand what you are agreeing to when you sign a document. If you are in doubt about anything, recruit the help of a lawyer to look over the document and explain to you in plain language what the agreement will be.

3. Keep up with mortgage payments.

Some scams advise homeowners to stop making regular payments on their mortgage while they “negotiate” with your lender. Never do this. Missing monthly mortgage payments can increase your risk of foreclosure and damage your credit, putting you into a deeper financial hole. It is also important to note that you should never be sending your mortgage payments to anyone other than your lender unless your lender has directly told you, in writing, to do so.

4. Never sign over your deed.

Under no circumstances should a mortgage relief company ask you to sign over your deed to a third party. There are two times you can sign your deed over: when you sell the home or if you sign it over to your lender in order to fulfill a debt forgiveness agreement. Signing your deed over to a third party will not save your home.

If you do find yourself the victim of one of these scams, the best thing you can do is to report it. This will give you the best chance of recovering some of your money, although the process may be lengthy. You can file reports through the FTC, the Better Business Bureau, the Consumer Finance Protection Bureau, or through an attorney.

Most people fall for mortgage relief scams looking for a quick way to get out of a financial jam, but getting on top of debt takes time and commitment to financial responsibility. If you find yourself in trouble with your mortgage, the best thing you can do is work with your lender to come to an agreement on the situation. Going to your lender directly can be intimidating. Veitengruber Law is here to help. Our experienced NJ real estate legal team can work with you to determine real debt relief solutions for your specific situation.

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Protecting Senior Relatives From Scams: What You Need to Know

senior scams

No one is immune to being scammed, but older Americans are a particularly vulnerable segment of our population. While victims of scams may be reluctant to report their losses due to embarrassment or reluctance to engage in legal disputes, the Federal Trade Commission estimates that over 7% of seniors aged 65 to 74 and over 6% of those over 75 become victims of fraud, losing billions of dollars annually.

If you are helping to care for aging loved ones, it’s vital that you do your best to keep them informed of current scams. Any elderly person who is experiencing deteriorating cognition, should have someone review their finances regularly. By staying current on their financial situation, you will be able to nip anomalies in the bud before they’ve lost hundreds or thousands of dollars.

The following guide to protecting your senior loved ones from scams in the year 2019 is intended to help prevent fraud, but read to the end if you need to report a fraud that has already occurred; we’ve got links to put you in touch with the right authorities.

1. Be wary of seemingly official communication that evokes fear or panic.

As we all know, we don’t think clearly when our negative emotions have been strongly triggered. That’s why scammers use sneaky tactics to scare senior citizens into sharing personal information or outright forking over their hard-earned savings.

Tell your loved ones that anyone who contacts them and says that there is an urgent reason for them to reveal private data (bank account numbers, credit card numbers, SSN) is not to be interacted with.

A bank isn’t going to call and request such information, and no governmental organization—whether Social Security or the greatly-feared IRS—is going to call and threaten them at home.

Under no circumstances should sensitive information be shared with cold callers. No matter your age, do your due diligence to make sure personnel are legitimately associated with their cited organization.

2. Even if your loved one does want to make a purchase, advise a waiting period.

No trustworthy sales person will pressure someone to buy immediately. Sales people who advise taking little or no time to mull over a financial decision are using fraudulent tactics to manipulate their target into making a bad decision.

It’s a good idea for everyone to wait at least 24 hours before acting on a decision to purchase. If you can, wait a full week and think through the implications of any big-ticket item.

3. The Grandparent Scam is new again.

In this take on the classic scam, someone calls an older person and pretends to be their grandchild. They spin a sad story—again, designed to spark a wave of disorienting emotion—that they’ve been in a car accident, or have been robbed, or even imprisoned, and beg for money to be wired over immediately.

While younger people who are scammed are more likely to wire funds, older adults mail cash. They’re taken for a median individual loss of $9,000.

Claiming to be avoiding loss of money in the mail, these unscrupulous crooks ask their victims to stuff cash into several envelopes, then lay the envelopes between magazine pages and mail them out.

Should your loved one receive a call from a distressed “family member,” they should take the time to call that person on their usual line and verify their whereabouts and situation. Don’t mail cash under any circumstances.

4. Natural disaster relief is rife with scammers.

After a natural disaster, scammers waltz in, targeting the victims and their family members/friends. These scams may begin with cold calls, social media outreach, emails, or even with a personal visit.

Scammers may pretend to be a charity or federal agency. They’ll ask for donations or personal information, often saying they need this information to complete official forms requesting funds for direct disaster relief.

If you or your loved ones are victims of natural disaster, use NCOA’s BenefitsCheckUp® disaster assistance tool to locate legitimate sources of aid.

5. Counterfeit Prescription Drugs

You may receive advertisements or emails advertising prescription drugs that work just as well as (and for less money than) the ones you’re paying for now. These are, largely, fake. These drugs may not even be real, and the people behind them are just trying to get your insurance information or credit card number. Alternatively, the drugs may be counterfeit, essentially acting as placebos. This is obviously severely dangerous to your health and potentially fatal. Elderly people consume about one-third of all prescription drugs in the U.S., despite making up less than 15 percent of the population, and scammers take aim at this need for cheaper prescriptions.

Here’s who to contact if you need to report a scam.

The FBI deals with blue- and white-collar crimes. If the scam happened online, they’ll look into it.

The FTC handles telemarketing and phishing scams.

If you’ve made a misplaced investment in an opportunity only to realize you’ve been scammed, report it to the SEC.

The SSA is who to inform if you’re scammed with regard to your social security number.

If an online business has fraudulent practices, report it to the BBB. Their website identifies businesses across the country who have attempted to scam customers.

How to Avoid Losing Your Money to a Scam Artist

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In today’s technology-driven world, online bill-paying has become increasingly common. You can even pay many of your bills over the phone if time is of the essence. The convenience this offers, along with the paper saved when avoiding manual bill pay, has made making remote payments feel natural for many people.

Our high comfort level with making online and over-the-phone bill payments brings with it some potential (and quite serious) problems. The first of which, naturally, is the possibility of identity theft, especially when paying online while using a non-secure website. For more information about shopping safely online, read this.

Another time to be wary is when you are contacted on the phone by someone who claims you are indebted to them. Sometimes, scammers using this approach will have done some research ahead of time so that they are familiar with places you shop, visit, or receive services or medical care.

Even if you recognize the name of the business that is being used, be sure to ask them to provide you with a written invoice through regular mail before paying. If you have no recollection of owing any money to the business mentioned, and the caller refuses to send you a written invoice, hang up the phone.

Any legitimate business/lender/creditor will be able and willing to send you a written invoice for money you  actually owe.

DO NOT, under any circumstances, simply pay money to a “company” to get them to stop bothering you. If you don’t remember owing the money in question, chances are good that you actually don’t owe it! If you request a written invoice for the bill or loan in question and continue to be harassed for the money without receiving an invoice, it’s time to talk to an attorney, because often their behavior is illegal and can be stopped.

The bottom line is – if you don’t know where a supposed debt is from, and the “collector” can’t or won’t divulge what they money owed was for, you’re being scammed.

If you’ve experienced something like this situation recently, and you mistakenly paid money out – it’s also important to put some important practices into place that will A) Keep this from happening in the future, and B) Protect your accounts that you may have opened up to foul play. By consulting with a licensed attorney who specializes in debt resolution, you’ll be able to arm yourself with the best information available.

In addition, it’s possible that some or all of the money that you paid out to a fraudulent collector can be recovered, and hopefully that particular scam artist will be stopped in his current path of deception – saving others from being taken advantage of in the future.

To learn more about how we can help you, call Veitengruber Law now. You can also gain useful information by reading a number of our blog posts about identity theft and fraud. We look forward to your free consultation with us if you should choose to make an appointment!

 

Image credit: Tim Parkinson

Reverse Mortgage vs Home Equity Line of Credit

 

buying a houseAs we have previously talked about on our blog, there are many preconceptions when it comes to reverse mortgages. The basics: if you are age 62 or older and own a home with little to no mortgage payment, you can apply for a ‘reverse mortgage loan.’ You can present the equity in your home to a lender or bank as collateral for them to lend you money – either as a line of credit that you can use as needed, a one-time lump sum, or monthly payments. You can read more about the details of reverse mortgages here.

If a reverse mortgage sounds too good to be true, it’s for good reason. Even the most legitimate reverse mortgage loans come with high interest rates and exorbitant loan fees. Due to the 2008-2009 financial crisis that some financiers have referred to as “worse than the Great Depression,” many seniors have found themselves struggling financially in their golden years. Unfortunately, unscrupulous brokers have preyed upon some of these vulnerable retirees in order to profit from their financial strife.

If you are at least 62 years of age and have found your retirement income lacking, it’s important that you know how to avoid potential scams that could leave you in an even worse financial position. The following situations should send up a red flag:

  • It’s free money! If you receive an advertisement for a reverse mortgage that claims you will qualify for free money, throw the ad in the trash bin recycling container post haste. Reverse mortgages are definitely not free, and any lender who attempts to trick you by omitting important facts about fees and interest is not a lender you should trust.
  • No down payment. Not only are there down payments with reverse mortgages, but they can be quite hefty – sometimes tens of thousands of dollars!
  • Risk free. Some brokers misrepresent the risk involved in a reverse mortgage, which may lead you to believe that you can never lose your home, no matter what. The reality is that a reverse mortgage will become due if you don’t live in the home for 12 consecutive months, or in the event that you fail to pay property taxes or homeowner’s insurance. You must also keep the home and property in good condition. If you fail to meet the requirements of a reverse mortgage agreement, your home will be foreclosed upon, and you will be evicted.
  • Confusing language. If you don’t understand any or all of the information presented to you, do not sign anything. Reverse mortgage loans are notorious for being complicated and using tricky language. It is always in your best interest to seek legal counsel who can review the loan paperwork and translate anything that confuses you.

Because it can be easy to make a reverse mortgage sound like the best thing since sliced bread (and who doesn’t love bread?), many retirees don’t know that they have other options. One such alternative is a HELOC, or Home Equity Line of Credit.

While still using your home’s equity in order to boost your retirement income, HELOCs offer much lower interest rates. There is also no age requirement to apply for a HELOC, and there are no closing costs or loan origination fees. The equity in your home almost never gets depleted, which means your heirs will be able to keep your home without any problems.

Rather than requiring an age upwards of 62, in order to qualify for a Home Equity Line of Credit, you’ll have to have a very good to excellent credit score. You will also make monthly payments on your HELOC, and if you miss payments, you can lose your home to foreclosure.

If you need more information about how to increase your retirement income, seek legal counsel from a NJ attorney who specializes in credit counseling, elder law, or real estate.

 

Image credit: Images of Money