Mortgage fraud is rapidly becoming one of the most significant areas of interest for law enforcement – local as well as federal. Recently the FBI issued an wonderful addition to their web site related to mortgage fraud. This series of blogs will take the FBI’s comments and expand the content so that individuals can avoid mortgage fraud.
General Tips (per the FBI):
- If it sounds too good to be true—it probably is!
- Never sign a blank document or a document containing blanks. This leaves you vulnerable to fraud.
- Don’t sign anything you don’t understand.
So let’s think about these:
- If it sounds to good to be true – it probably is! Often unsuspecting individuals are the victim of mortgage frauds. They are told that foreclosure can be avoided by participation in a “fraudulent” program. The FBI says, “Be aware of e-mails or web-based advertisement that promote the elimination of mortgage loans and credit card and other debts while requesting an up-front fee to prepare documents to satisfy the debt. The documents are typically entitled Declaration of Voidance, Bond for Discharge of Debt, Bill of Exchange, Due Bill, Redemption Certificate, or other similar variations. These documents do not achieve what they claim.”
- Never sign a blank document or a document containing blanks. This leaves you vulnerable to fraud. Often, in the interest of closing a loan (an often paperwork is delayed until the last minute), you might find yourself anxious to get it over with…finding out that the paperwork is incomplete. You trust the mortgage company or broker – after all, they are the ones helping you get what you think you’ve gotten. While most of the time that is true, all to often, there are cases of mortgage fraud that go undetected until the borrower has faced financial ruin based on an unsuspected fraud.
- Don’t sign anything you don’t understand. Well, of all the general comments or tips the FBI has listed, this one is the most difficult. Really, how many people read the entire document – the fine print before moving forward. An educated guess is less than 5% and I’ think I’m being generous. As many homes as I have bought and sold…I have to honestly say I’ve never read the entirety of the documents. Shame on me! While this example is not mortgage fraud, it’s a great example of not knowing the details:
I closed the loan on my home being assured that there were no prepayment penalties. Great I thought, I can send by payment in twice per month and thereby reduce the interest. So I began that process. It didn’t take long to get in a payment contest with the lender who said that they had to have the payment in full once per month. I, of course, let them know that no only did they have the payment in full within the month, but they also had additional payments toward the principle. They refused the payments and dinged me with a late payment because I was advancing my payment. I didn’t read the fine print. They did refer me to a company that will do what I wanted, but of course, I had to pay them a fee for what I could do automatically on line. Lender wins…I lose.
Now why would the contract be written in such a way. Easy, my approach would have cost the lender precious interest and required them to be more diligent in the interest and principle calculations.
Every choice has a consequence. As a business ethics speaker, I have the opportunity to visit with a number of people around the country as I present talks on ethics, fraud and consequences. I hear stories that would make your hair turn grey (and my is well on the way). http://www.chuckgallagher.com
The stories show how unsuspecting people can become victims of fraud pure and simple and never know. Hat’s off to theFBI for taking the interest in alerting the public to issues that could save you money, save your credit and make life easier by paying attention to simple but effective strategies.
If you have been a victim of mortgage or credit fraud, feel free to comment as those comments might benefit others.
Business ethics speaker, Chuck Gallagher signing off…