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The scammers will often use high-pressure tactics to force victims to act immediately or sign paperwork without reviewing it. Right now, fraudsters are trying to convince homeowners that aid programs are ending and they need to take immediate action or face consequences from being behind on payments. VA loans are recognized as one of the best home financing options for those who meet the VA loan requirements, but recently there’s been an uptick in the frequency of scams targeting homeowners with this type of loan. It’s always important to be aware of common scams and fraudulent schemes so you can protect yourself from becoming a victim, and that’s especially true when the scammers are more aggressive. But it’s not a free ride — in exchange for lender credits, you’ll usually pay a higher interest rate on your new loan.
They may also try to convince you that your home is facing foreclosure. The CFPB and the VA both urge VA loan borrowers to be educated consumers and learn about how refinance loan scams and deceptive offers work. The Department of Veterans Affairs explicitly prohibits lenders from advertising that borrowers can skip one or two mortgage payments when refinancing. A lender might list this as a benefit because there are not real benefits to your refinance; or because it wants the offer to look better than it is. Basically, any third party asking you to deceive your loan servicer or withhold information from them should be viewed as a scam and avoided at all costs.
If your third party keeps telling you time is short, supplies are low, availability is extremely limited, or that the offer ends very very soon, don’t give in. Part of the answer has to do with standard banking industry practices. Often, that means refinancing for a low enough interest rate that you’ll save money on monthly mortgage payments and total interest costs.
How To Avoid VA Home Loans Scams
Fraudsters are also promising things like lower interest rates through refinancing or loan modifications to provide solutions for financial troubles. The patient or claims reviewer suspects medically unnecessary services or noncovered treatments were performed to generate payments. Patients are induced to receive care or products by waived copayments and the offer of discounts or gift cards.
This guide can help you under the homebuying process and how to make the most of your VA loan benefit.Download the Buyer's Guide here. One reason for the hundreds of new reports may be the outreach the department has done to destigmatize the reporting of potential encounters. Army linebacker Andre Carter II would be required to serve two years active duty before playing pro football under legislation already passed by lawmakers.
And how the VA home loan helped them realize the dream of homeownership.
Largest Retiree & Veteran COLA Increase In Decades Approved
The first thing the VA and the Consumer Financial Protection Bureau want you to watch out for? People trying to contact you about a mortgage offer without you having initiated contact first. The named owner who is an individual with disabilities incurred from military service has little to no experience with the work outlined in their awarded contracts. VA employees, for themselves or on behalf of their family or friends, purchase stocks or financial interests involving a contractor, subcontractor, vendor, or other entity doing business before VA.
No, it’s not common or even likely in most cases to be offered a purchase loan that immediately offers to let you skip a mortgage payment. Perhaps a truly ham-fisted scam artist might try such a thing, but it’s more likely this scam would be run as a refinance offer. Don’t trust any refinance offer that advertises skipped payments on a government-backed loan of any type; VA, FHA, USDA, etc. The Federal Trade Commission reported that military retirees and veterans who filed reports with the agency in 2020 lost $66 million. The top fraud complaint was for imposter scams and the number one target of identity theft was government documents or benefits fraud. The post includes tips for spotting and avoiding VA home loan scams from the Consumer Financial Protection Bureau.
Consumer Fraud Alert - Tips for avoiding VA home loan scams
The Consumer Financial Protection Bureau and the Department of Veterans Affairs have issued a “warning order” to both service members and veterans with VA home loans. This order went out in November 2017 and addresses the solicitation promises that are being made by some lenders. The CFPB suggests contacting the VA or your mortgage service provider if you have questions or suspicions of a scam. If it’s not a legit offer, you should stop communicating with the scammer and report it to your State Attorney General’s office and to the Federal Trade Commission .
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Your home equity isn’t free money — and it’s important to understand the implications of a cash-out refi before jumping in. When you’re short of cash, you may want to dip into some of the equity you’ve built up in your home. This is also known as “equity stripping” or “equity skimming,” because the scammers may suck the equity out of your home, unnoticed by you because you pay nothing out-of-pocket for your refinance. If you’re on a federal or state do-not-call list, remind lenders that it’s illegal to call or text you without prior consent.
Since these loans are easier to approve and often close faster than traditional refinances, VA Streamline refis are more attractive to scam lenders intent on “churning” loans to turn a profit. So even if a refinance offer looks perfectly legit, you’ll need to apply with the company and get a custom rate quote to know how good of a deal it can truly offer you. With the recent financial crisis resulting from the COVID-19 epidemic, fraudsters are also trying to convince veterans that their homes are facing foreclosure or they owe late fees.
Do-not-call laws lead to hefty fines for any lender that violates them. Plus, you’ll likely need the money to fund a new escrow account on your new home loan. An ultra-low interest rate offer that’s not clearly accompanied by the terms of the loan is likely misleading. There are a few red flags that can reveal a scammy or misleading VA refinance offer. Unfortunately, some shady mortgage companies try to make a profit by urging homeowners to refinance — even when it’s not in their best interest.
The VA loan program was started to give veterans the opportunity to become homeowners, and it’s been an overwhelming success. Unfortunately, a few unscrupulous companies have entered the scene to generate profit at the expense of veterans and active duty service members. There are three main types of scams that specifically target VA loans, two of which involve “churning,” or a company enticing a borrower to refinance with little or no benefit.
Scammers may try to get borrowers to refinance in this way repeatedly. A homeowner might refinance for this new interest rate, only to be surprised by higher-than-expected loan costs or unaffordable monthly payments. The VA loan program is perhaps the best cost-saving home loan program available. More information is available about these loans, thanks to the internet. More qualifying veterans and active service members are taking advantage of this lending option than at any time in the past. The Department of Veterans Affairs doesn’t typically dispense consumer advice the way federal watchdog agencies like the Federal Trade Commission does.
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