If you’re struggling with mortgage payments, it’s important to be on guard against fraud. There are many different ways that people or companies may try to take advantage of homeowners in difficult financial situations.
You should educate yourself on common mortgage forbearance fraud tactics so you know what to be on the lookout for and how to avoid them. An experienced attorney can help you identify fraudulent schemes and avoid them, as well as take steps to hold fraudsters accountable if you do fall prey to one of their schemes.
Contact Denbeaux Law today to learn more about forbearance and how to avoid forbearance fraud.
What Is a Mortgage Forbearance?
A forbearance is a short-term mortgage relief agreement between a homeowner and a lender. In a forbearance agreement, mortgage payments are reduced or suspended for a brief period of time.
Forbearance agreements can function in a variety of ways. Depending on your agreement, your missed mortgage payment may be forgiven, added to the end of your loan term, or expected to be paid in one lump sum at the end of your forbearance period.
Common Fraud Tactics In Forbearance
There are a variety of fraudulent tactics lenders or other companies may use to try to take advantage of you. These are a few examples of common fraud schemes that you should be on the lookout for.
If you’re exploring a forbearance or other type of mortgage modification, it’s recommended that you consult an attorney. Your attorney can help you through the process and review any agreements to make sure they’re in your best interest.
Delay
Delaying an agreement is a common tactic. Mortgage service providers may avoid giving you a forbearance or modification. They may “lose” applications and require your packet to be redone or resubmitted.
After a long enough delay, getting mortgage assistance may no longer be an option. If you get too far into debt on your mortgage while waiting for an agreement, you may no longer be able to qualify for any type of mortgage assistance.
Bait and Switch
A bait and switch involves confusion and vagueness from a lender. Federal forbearances and private forbearances have different rules and regulations.
Federal forbearances typically don’t require repayment of any missed payments during the forbearance period. Private forbearances almost always require missed payments to be repaid.
Only certain types of mortgages are available for federal forbearances. Lenders may use confusing terminology to make it sound like your forbearance won’t require repayment while expecting you to make a lump sum payment at the end of your forbearance period.
If you’re not expecting to make this payment and don’t have the funds, you may be left with limited options. Homeowners who are unable to repay forbearances could have to sell their homes to avoid foreclosure.
Best Tips For Mortgage Negotiation to Avoid Fraud
Forbearance fraud isn’t legal, but it doesn’t mean that fraud attempts don’t exist. There are some helpful things you can do to avoid and fight fraudulent tactics.
Don’t Pay Someone To Negotiate For You
People who aren’t qualified may approach you and offer to negotiate with your lender on your behalf for a fee. Don’t take them up on this offer.
Your mortgage company won’t negotiate with anyone without your approval. Someone offering services as a mortgage negotiator could be scamming you out of money.
An attorney can help work with you to understand your mortgage options, negotiate with your lender, and explain any modifications offered. When facing mortgage issues, consulting an experienced attorney is a trusted way to get mortgage advice.
Remember, attorneys are monitored and held to a set of standards by their Bar, while other types of negotiators aren’t and don’t have any licensure or overseeing body to hold them accountable for their work.
Don’t Sign Away Your Title
If you sign away on the title of your home, you no longer own your home. There is no situation where you should sign away the title or deed to your home unless you are selling it.
There is a common scam by fraudulent lenders where they offer to help you out of a tight financial situation if you sign over your title. They claim to let you pay off any mortgage debt through monthly payments, but the truth is they now own your home, and you’re paying rent.
If you sign over the title to your home, whoever has the title is the owner, and they can kick you out at any time. There is no need to transfer the title to another person or entity as part of any legitimate forbearance or loan relief program.
Don’t Make Mortgage Payments Not To Your Lender
There are a lot of different scams that may try to convince you to give them a portion or all of your mortgage as part of a mortgage relief program. No one other than your lender is entitled to your mortgage payment.
Paying someone else money intended for your mortgage won’t help you pay off your mortgage. You could end up still owing monthly payments to your lender after making payments to a third party.
Be Wary of Forbearance Advertisements
If you receive mail, email, or telephone advertisements for forbearance programs, it’s a good idea to do due diligence and research into those programs before giving them any information.
Not all forbearance advertisements are fraudulent, but they could be scams or misrepresentations of the services offered.
Contact a Foreclosure Attorney Today
Forbearance can be risky. There are a lot of opportunities for fraud, which can put your home at risk. It’s important to be careful when pursuing or applying for a forbearance program or mortgage modification.
If you’re struggling with your mortgage, contacting an attorney may be a good idea. Your attorney can help you through the mortgage modification process by assisting you with lender negotiations, spotting fraud, and protecting your rights and interests.
Contact Joshua Denbeaux today to learn more about forbearances and how we may be able to help you avoid forbearance fraud.
