Pasadena REALTOR Michael Gentile said that you can lose your house to a loan and refinancing scam. He also said that identifying the type of scams can help us avoid them. The different types of home equity loan and refinancing scams are:
Loan Flipping
Cash-out refi, or getting equity when refinancing a mortgage is not a scam. It only becomes a scam when a lender offers you another refinance such as funding a new vehicle. The offer is made after he or she receives a few payments.
Scam artists will con you with a promise of easy money. Loan flippers charge way more than the average 3% to 6% settlement cost, and apply the settlement into the loan to hide the over-all charges. This leaves you with more debt to the point that you may be forced to sell your home. Always make it a point to compare quotes from several lenders to avoid scam.
Equity Stripping
Another example is a scam artist who promises to get you a better loan terms if you sign over the deed. You stay as a renter as the scam artist empties the home equity. Never take a loan that is over 38% of your gross income. Do not just transfer the deed to anyone without consulting an expert real estate adviser.
Unsolicited Offers to Refinance
There are scam artists who offers refinancing disguised as an affiliate of the government. Always check back on these offers by consulting a legitimate housing counselor recognized by the US Department of Housing and Urban Development. You can check Making Home Affordable program for loan modification and federal refinancing.
Lenders Disclosure Rules to Protect You
In January 1, 2010, the disclosure rules are ratified. Lenders must use HUD-1 Settlement Statement and Good Faith Estimate for transparency in key loan terms. They are to be used for home equity loans and mortgage refinancing, except home equity lines of credit. Lenders must only charge for a credit report ($37) when issuing a GFE.
No comments:
Post a Comment