How to Avoid Lending Fraud
BorrowMoney takes your online security very seriously, and we want you to be aware that we have seen an increase in online and phone scams using the BorrowMoney name. In these scams, the BorrowMoney name is used to request either money or personal information. Often, these scams make promises to give you credit in exchange for "advance fees," "upfront fees," or "insurance payments." Protect yourself by learning more about upfront fee scams and about how to protect yourself from mortgage scams.
If you have any doubts about the source of an offer, please sign in to your BorrowMoney account to see the names of lenders who have received your information from BorrowMoney. You can also visit our lender ratings and reviews page to learn more about the licensed money lenders on the BorrowMoney network.
For more information on mortgage scams, please see The Federal Trade Commission’s “Message to Homeowners."
By Roby Hicks
Most of us do not have enough cash to buy a house, which means we will likely have to take out a mortgage. The key is to avoid a host of lending and mortgage scams in the industry. Here are some helpful tips:
1. Get personal and professional referrals.
This is definitely one of the best ways to weed out mortgage lenders that double as scam artists. Is there still a chance that you could get scammed? Yes, but it is significantly less likely than if you had chosen a mortgage company out of the blue.
2. Avoid online companies with minimum contact information.
If an online company's contact information only consists of an e-mail address, then inquire if the company also has a brick-and-mortar address, and a landline telephone number. If the company does not have such contact information, then it is a red flag that the company could be a fly-by-night one.
3. Never sign your name without understanding everything on the document.
Like any other financial transaction, there might be some information on a mortgage company's documents that you do not understand fully. That is OK! If anything seems unclear then ask for clarifications. You might also want to request a third party to "translate" that information. The reason is that there is no 100% guarantee that you will receive honest answers from a mortgage lender-especially if they are scam artists.
4. Search for complaints.
Organizations like the Better Business Bureau track complaints against various businesses, including lenders. It would be reasonable for just about any company in the world to have had one or two disgruntled customers. But if a mortgage company has received tens or hundreds of complaints, then you should probably take your business elsewhere.
5. Consider how many years a lender has been operating.
That has not to say that you should automatically follow an "older is better" rule. However, if a mortgage company has only been in business for months, weeks, or even days-then choosing the company would be somewhat risky. On the other hand, there is a better chance that the older and established company would be less likely to scam you.
6. Never share personal information early in the process.
If a company requests that you provide information as your Social Security Number via a telephone or online, then you should definitely avoid it. Be cautious about which companies you provide it to, and how soon you provide it to them.
7. Look for no-money-down mortgages
There is basically no reason why you should be required to make a down payment before taking out a mortgage. Any fees, taxes, etc. owed should generally be owed until after the mortgage has been finalized. Be particularly cautious about up-front funds that a lender charges for "services" such as delinquent loan modification.
8. Be wary of certain guarantees
In particular, be cautious of mortgage companies that guarantee they can modify your mortgage or stop a foreclosure. While it is possible to accomplish these goals, there is never a 100% chance that any company can accomplish those missions.
These above tips will give you the best chance to avoid mortgage scams.