How to Spot Home Equity Scams !

Whether you need to dip into your home’s equity for a new roof or an expansive new kitchen, the equity is important. And just as you would protect a credit card from theft, so should you guard against predatory lenders, too.

Here are some common home equity scams, plus tips on how to dodge them. If you think you’re gettinequity scamg scammed, contact the Federal Trade .

Loan Flipping

This is where a lender encourages you to refinance your loan repeatedly. During refinancing, the lender charges lots of high fees to sap your income. And in many loan-flipping cases, each successive loan includes higher and higher fees. With each flip of the loan, you increase your debt. If you’re not careful, you can end up with the lender foreclosing on your house.

Tip: Don’t trust pushy lenders. If you’re in trouble and need to refinance, seek professional advice from someone like a Housing and Urban Development (HUD) counselor.

Credit Insurance Packing

You’ve just agreed to a home equity line of credit on terms that seem affordable. But at closing, the lender pressures you into signing papers that include charges for credit insurance or other costly terms you didn’t ask for.

If you object to the fees, the lender might use scare tactics like telling you that the loan will have to be re-written—or result in huge delays and a reconsiderations of your application.

Tip: Don’t fold under pressure to sign documents and never sign anything you haven’t read or that has blank spaces. It’s better to walk away.

Deceptive Loan Servicing 

A loan servicer might try to obscure account statements and payoff figures, making it almost impossible to determine how much you still owe. Or, after you get your loan, the servicer starts sending letters saying your payments are going to be higher than expected.

The servicer also might tack on taxes and insurance you had already arranged to pay yourself, late fees even though your payments have been on time or charge indecipherable legal fees.

Tip: Challenge any fee you don’t understand. Request a full explanation, in writing, for those that seem wrong.

The Home Improvement Scam

contractor knocks on your door and offers to put on a new roof or resurface the driveway. In order to do so, you’ll need a home equity loan—but don’t worry, this contractor knows a great lender.

If you agree and meet with the new lender to complete all the paperwork, you may end up agreeing to a loan with high points, fees and interest. And the contractor probably got a kickback.

Tip: Don’t go through a contractor’s lender. Shop around yourself.

Taking the Whole Deed 

When you’re having trouble paying your mortgage, another so-called lender may contact you, promising help with new financing. In the meantime, the lender wants you to deed your property to him, calling it a temporary measure to stave off foreclosure.

With your equity gone, the lender can treat your home as his, borrowing against your equity or charging you rent and not paying the mortgage. When the bank forecloses on the home, you’re out on the street.

Tip: Never sign over your deed. When it comes to your mortgage, don’t trust solicitors.

As always if you or any of your friend or family need any help on a mortgage or if you are planning to buy a house or if you have any question regarding obtaining a home loan you can always call M. Kamal, CPA & Mortgage Expert for a FREE no cost consultation. You can go to and subscribe to our free Mortgage Secret weekly Video advise. For any question please call M. Kamal… your mortgage adviser for life at 718-507-LOAN (5626).



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