Getting a loan to build or renovate your house has become a normal practice. A large number of lending companies have come up that offer the loans at varying rates. Many of these companies are doing the business with good intent but the increasing market has attracted some frauds too. These fraudulent companies often misguide the buyers and the result is one landing in trouble.
Therefore, one must know the scams related to the mortgage market so as to avoid landing into legal complications.
Target Of Mortgage Scams
In most of the cases the scams are for the people that are trying to get a refinance of their mortgages. Mostly, such a case results in higher interest rates and other stricter conditions. However the fraud companies try to fool the desperate people by offering unbelievably attractive packages. There are scams for the first buyer too and hence a buyer should thoroughly investigate about the lending company before he lands himself into their debt.
Types Of Scams
Few of the common scams that the lending agents use are discussed below.
Bait And Switch Fraud
This is a common practice at the retail stores as well. This fraud means that you offer a product at very attractive price. When a buyer walks in to buy that product, you state that it is no longer available or is out of stock. Then you offer another product to buyer.
The buyer buys it with a mind that it is as good as his previous choice but in fact it is not. Hence the buyer is baited into buying a useless and expensive product of mortgage.
Loan Steering
It is the practice in which a lender steers the buyer to his choice of loan. For example, a buyer wants to get Type A loan. But the lender will state that he can not qualify for that type of loan. However he will try to sell Type B loan which is more beneficial for the lender instead of the buyer.
Forgetting Details
It is also a kind of scam in which an agent forgets about the taxes and other charges once he is selling the product. As soon as it is purchased, the buyer finds that the hidden charges have come up and hence the product has become much more expensive than what he thought.
Miscellaneous Kinds
There are certain other tricks in the fraud agent’s dealings like they offer you the adjustable rate of mortgages, negative Amortization Loans and interest only loans. These loans are not illegal but one must study the details of these all contracts. Only after consulting a professional, should one opt for such loans.
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