We’ve all been desperate at one point or another. Maybe it was for a good grade, or a winning play, or even a bag of popcorn at the movies. Financial desperation, however, whether it be trying to find a job, or trying to keep a roof over your head, can be stressful beyond measure. And when you’re financially desperate you have to be especially careful to protect yourself and your family against scams.
Loan modification scams have grown exponentially in the last few years—especially since the economic downturn. Even though the markets are stabilizing, scammers are still out there ready to exploit and to ruin. Though their tactics are forever changing, the following tips hold true and can help keep your money, your home, and your investments safe.
Asking for Cash Up Front
What do scammers want? Your money. They want quick cash and therefore will ask for payments up front to begin “working” for you. Fees can vary anywhere from a few hundred dollars to several thousand, but legitimate loan modifications won’t ask for you to transfer money to them first thing to begin working. So if money is the first thing discussed, run, run, run. This is especially true if you are asked to transfer money anywhere outside of the United States.
Telling You Not to Talk to a Financial Advisor
Scammers want to keep you in the dark and some want to keep the scam going as long as possible—even asking for monthly payments along the way. You talking to a trusted loan officer or your financial advisor will nip their scam in the bud, so they’ll often try to persuade you to deal only with them and not with any outside party. This is a huge red flag, as any legitimate loan modification option will have nothing to hide from you or from anyone else.
Promising No Credit Checks
In times of financial difficulty your good credit is often the first thing to go, so it can be very attractive to be promised that your credit doesn’t matter at all. The truth is that your credit does matter. Any loan officer worth his or her salt knows that credit is an integral part of lending. Does this mean if you have less than perfect credit, there is no hope for you? Of course not! Just don’t be fooled by those telling you that they will not even look at your credit score. That is a lie.
Demanding Personal Information over the Phone
If someone promising to modify your loan and save you from financial ruin asks for your personal information—like social security number, birth date, mother’s maiden name—over the phone, be warned; they may be collecting this information to steal your identity. Though this personal information is needed for a legitimate loan modification, the information will be shared person to person, in a genuine place of business. Not in a less-than-secure manner like email or telephone.
Whether it’s a cold call, a flyer, or you’re approached in person, those running scams can be very persuasive and are particularly good at exploiting those in desperate situations. They prey on your emotions and promise you an “easy” way out of your financial distress that, in a moment of weakness, might sound like just the answer to your problems. By following the above tips, you can better protect yourself from being compromised. And if you are in financial difficulty, do your homework. There are valid loan modification programs out there. Talk to your trusted loan specialist and don’t be duped. There is hope.
Nice newsletter. Good article. Good information. Thank you. Carol
For conventional financing, borrowers with scores at 740 or anywhere above generally receive the same loan pricing (rate and cost). That being said, the better your credit the higher your chances of receiving loan approval with high debt to income (up to 50%) or high loan to value (up to 95%) which can be a major benefit when applying for a new loan. For Jumbo financing, borrowers with credit scores above 800 are generally rewarded with both better pricing and easier guidelines. There are no situations where better credit is a negative when obtaining new financing so we should all continue to strive to reach and then stay in the 800’s.
What are the advantages of a score over 800
Thank you Mike for this information. As a residential realtor the information that you provide is crucial to a successful transaction for my clients. You are indeed a pleasure to recommend to all of my clients. You are so professional, thorough, conscientious and pleasant to work with. !!
Hi Dane! Wanted to make sure I'm clear on this. Am I right in saying that on whichever remodel is done you still take a loss rather than an increase in value - the ROI will never exceed 100% of cost?