As the mortgage market and economy continues to be weak, there's been a huge rise in the number of mortgage fraud cases reported, and a 48% jump in foreclosures last month, alone.
Illinois Attorney General, Lisa Madigan, just filed a lawsuit against Countrywide, the nation's largest mortgage lender, for issuing risky and expensive loans. The Shop Cop Jennifer Litwin has some tips on how to avoid being a victim of fraud and mortgage scams.
HOW DID WE GET SUCH A BIG JUMP IN MORTGAGE FRAUD CASES IN ILLINOIS AND NATIONALLY?
SPOTTING MORTGAGE FRAUD
- Lenders encouraging borrowers to inflate their income on their application-guaranteeing they would be "qualified"
- ARMs popular "affordability products"---get borrowers in at a low rate but soon after, bump up the rate by several percentage points-resulting in increased foreclosure rates. Borrowers fooled by low teaser rate
- Madigan is claiming Countrywide and other lenders mislead borrowers, neglecting to tell them the loan's true costs, telling them "there are no closing costs."
- Loan officer's compensation at many of these places was tied to the volume of loans sold-employers encouraged this.
AVOID BEING IN A FRAUDULENT SITUATION
- Lender encourages you to provide false info about your income, assets or employment
- Lender wants you to work with his or her appraiser, inflating the home's value
- Interest rate is 2-10% higher than market rates
- Lender tells you that you won't be able to get a mortgage elsewhere
IF YOU ARE A VICTIM OF MORTGAGE FRAUD OR SCAM
- Don't leave blank spaces, and don't allow the lender to fill out your application
- Don't lie; If found guilty of lying you could have to repay full amount of loan, plus a 6-figure fine, or even go to jail
- Hire your own appraiser---don't use the lender's
- Never pay more than 3% for loan fees; get closing costs upfront
- Read the Illinois Mortgage Lending Guide for tips on protecting yourself and your home. Go to www.illinoisattorneygeneral.gov/consumers/mor_lend_guide.pdf to read more
- Madigan created the Illinois Homeowners' Referral Helpline at: 866-544-7151 to help homeowners get the assistance they need-open from 8AM-5PM Monday-Friday
- Call the Mortgage Fraud Hotline: 800-437-2838, or the FBI
- If you can't pay your mortgage call 1-888-995-HOPE
- Call your lawyer
- Try to convert an ARM loan to a fixed
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