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Red Flags: Be Wary of Mortgage Scams

By John Voket, RISMedia Consumer

With the uptick in mortgage and loan fraud in recent years, we tapped the
Federal Trade Commission and continue our look at the agency's list of red
flags to help you stay safe from scam artists and fraudulent mortgage or loan

The FTC says watch out for:

  • Fees that are not disclosed clearly or prominently.
         Scam lenders may say you’ve been approved for a loan, and then call or
         email demanding a fee before you can get the money.

  • Any up-front fee that the lender wants to collect
         before granting the loan is a cue to walk away, especially if you’re told
         it’s for “insurance,” “processing,” or just “paperwork.”

  • Legitimate lenders often charge application, appraisal,
         or credit report fees, but they disclose those fees clearly and
         prominently; they take their fees from the amount you borrow; and the fees
         usually are paid to the lender or broker after the loan is approved.

  • A loan offered by phone. It is illegal for companies
         doing business in the U.S. by phone; to promise you a loan; and ask you to
         pay for it before they deliver.

  • Always check a company’s phone number from an outside
         source, and verify they are who they say they are. And get a physical
         address, too -- company that advertises a PO Box as its address is one to
         check out with the appropriate authorities.

  • Lenders not registered in your state. Lenders and loan
         brokers are required to register in the states where they do business. To
         check registration, call your state Attorney General’s office or your
         state’s Department of Banking or Financial Regulation.

  • A lender who asks you to wire money or pay an
         individual; legitimate lenders don’t ask anyone to do that. And don’t use
         a wire transfer service or send money orders for a loan -- legitimate
         lenders don’t pressure their customers to wire funds.

importantly -- if you think you’ve had an experience with an advance-fee loan
scam, report it to the FTC at ftc.gov or call toll-free, 1-877-FTC-HELP.