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July 21, 2021

Warning Signs of Scams and Unfavorable Loan Terms

It’s undeniable that the impact of COVID-19 has led to financial struggles for homeowners across our state and nation. In fact, a recent study conducted by OnePoll in conjunction with the National Association of Realtors discovered that more than 8 out of 10 American homeowners – 81% – say that the pandemic has caused them unexpected financial distress.

Sadly, some homeowners are taking desperate measures to ensure they can protect their investments. Scamming activity increases during times like these, so homeowners must remain vigilant and be cautious of offers that sound too good to be true.

How can one help to be sure that an offer of assistance is legit? Here are some warning signs of scams and unfavorable loan terms:

It sounds too easy. “Guaranteed approval” or “no income verification” regardless of borrower’s current employment, credit history, and assets. Frankly, if it sounds to good to be true, it probably is.

Large future costs. High-risk adjustable rate mortgages where payment rises significantly after the “teaser rate” period is seldom appropriate for families who already have had problems repaying other loans. These loans were a major cause of people foreclosing on their homes in the late 2000’s.

Barriers to refinancing. Prepayment penalties that make it hard for a borrower to refinance in order to pay off a high-cost loan by taking advantage of a low-cost loan.

No down payment loans. These loans may be split into two mortgages, with one having a much higher cost. Homebuyers should be sure they can afford the payments.

Unethical document management. Ethical lenders and brokers will never ask you to sign a blank document or a document dated before the date you sign. In short, know what you’re signing before you sign it.

If you are a homeowner who is struggling or unable to meet your loan obligations, work with housing experts and your lender to find a solution, today. Time is of the essence, so don’t wait until you fall behind to seek help. Acting quickly may help you keep your home and the money you have already invested into it.

Realtors are in the business of helping people become homeowners and want to do everything they can to make sure you can afford to stay in your home and remain cautious of potential scams. If your current lender isn’t willing or in position to help, you may be able to refinance your current mortgage with another lender. Your Realtor may also be able to help you find responsible lenders that offer fair and affordable loans.

Realtors work to keep people in their homes. That’s Who We R®.