To Crash Proof Retirement creator Phil Cannella, scams involving mortgage refinancing are some of the most heinous. With the millions of pending foreclosures stemming from the great recession, many destitute homeowners are reaching out to anyone who can help them avoid losing their homes; but for some, that “helping” hand can also reach right into their pockets, leaving homeowners in an even worse situation than before.
The Federal Bureau of Investigation (FBI) and the Better Business Bureau (BBB) warn consumers to be wary of anyone offering mortgage assistance, as they may be perpetrating a scam. One arrest was made recently in a textbook example of the “mortgage refinancing scam.” Scammers will offer to refinance your mortgage, and lower your monthly payments for a “nominal upfront fee.” The fee can be a few thousand dollars or tens of thousands. Although the dollar amounts differ, the scam is the same: You pay up front and the scammer does not deliver. Talk about kicking someone when they’re down. A homeowner already struggling under crippling mortgage debt is now out thousands of more dollars, in many cases taking away the last bit of money they had to avoid foreclosure.
Clever mortgage scammers will use false company names to throw off consumers. One scammer in California used at least six different company names to perpetrate his scam. Since the BBB and other organizations track these types of fraud, this scammer changed his company’s identity to stay one step ahead. Authorities did eventually catch up with him though, and he is now being brought up on criminal charges, as well as civil penalties.
Phil Cannella offers these tips to avoid being taken in by a mortgage refinancing scammer:
- Never work with a company that demands money up front. It is actually illegal for a company to collect any money from you until you and your lender approve the terms of the mortgage refinancing.
- Research businesses before giving them any money. The BBB and FBI are keeping tabs on these fraudulent businesses and will be more than happy to assist homeowners who are wary of any potential scammers.
- Search for free mortgage refinancing programs in your area before shelling out any cash. There are many government programs, at the federal, state, and local levels, willing to help you work on your mortgage for free.
If you think you may have been scammed, report it to your state Attorney General’s office. Scammers need to be brought to justice and the only way that will happen is if they are reported to the authorities. And be sure to check in with Phil Cannella to stay posted on the latest scams and frauds being perpetrated all over the nation.
FOR MORE INFORMATION FROM PHIL CANNELLA, TUNE IN TO THE CPR SHOW, EVERY SATURDAY 11AM-1PM. LISTEN LIVE