Veterans around the US have been receiving mortgage refinancing offers through mail, email, and social media. Apparently, special government programs have been established to offer amazingly low fixed interest rates — exclusively for veterans!
Except they haven’t. Any offer like this is a scam.
As reported by the Better Business Bureau, fraudsters this year have been plying phony mortgage offers to veterans at an unprecedented rate. While these offers claim to provide mortgage relief, they usually require an upfront fee. After collecting this fee, such scammers go incommunicado — and begin hunting for their next victim.
To understand mortgage scams, it helps to have a basic understanding of how the mortgage loan market works. There are two types of loans: conforming and non-conforming. People with good credit ratings and a minimum amount of debt often qualify for conforming loans. These loans have better interest rates and lower monthly payments. Other people, with “less-than-perfect” financial situations, often have to settle for non-conforming loans. There are a wide range of options for non-conforming loans, and consumers have to very carefully choose which offer is right for them.
It makes no fiscal sense for a mortgage banker or broker to offer low-interest rates to those with poor credit ratings. If an offer claims that you qualify for a special rate due to your background (for example, special programs for veterans), they are almost certainly lying.
In the offer, scammers will state that they can offer a better interest rate, offer to negotiate with a current lender to reduce their current rate, or claim to represent a law firm. In each story, the strategy stays the same: the fraudster demands a mandatory fee, then disappear upon payment. This few can range from a few hundred dollars to the deed to your home. Some warning signs of a phony offer are:
- The offer is part of a “special program” that you are eligible for.
- The offer requests that you do not contact your current lender.
- The deed to the property needs to be transferred.
- A mandatory fee must be paid upfront.
Consumers who find mortgage relief offers that have any of these signs should be extremely cautious,and report suspicious offers to the Federal Trade Commission.
Of course, mortgage scams are not new, and veterans are only the latest in the long line of targets. Those looking to make a quick buck will often collect information about targets. Public foreclosure notices, information on social media, and public files at local government offices often contain information that can be used to personalize a scam attempt. Fraudsters may even dig through mailboxes to gather this information. This step can lend credibility to the offer, increasing their chances of getting a target to pay the upfront fee. In other cases, the scam is only intended to get personal information, such as a social security number, birthdate, or credit card information. This information is then used to commit identity theft.
Alternatively, a scammer might choose to send a phony offer to a wide range of people — a “spray and pray” approach. Individuals who are typically not financially ready to handle a mortgage loan should automatically be suspicious of any solicitations for mortgage loans. If you are a college student, for instance, it is wise to stay far away from such offers.
This latest trend of mortgage scams is disturbing, but unsurprising. While a basic level of respect for veterans is expected in the US, anyone is fair game to fraudsters. Avoid becoming the next target. Beware of suspicious offers. Never pay upfront fees. For more information on scams, you can track ongoing frauds at the Better Business Bureau.
