Real estate horrors: mortgage scams to watch. (Consumer Life).Dana Evans, a 30-year-old entrepreneur entrepreneur (än'trəprənûr`) [Fr.,=one who undertakes], person who assumes the organization, management, and risks of a business enterprise. , had no idea she'd be the victim of a scam (SCSI Configured AutoMatically) A subset of Plug and Play that allows SCSI IDs to be changed by software rather than by flipping switches or changing jumpers. Both the SCSI host adapter and peripheral must support SCAM. See SCSI. by a mortgage company recommended by a friend. After locating an abandoned multiunit building she wanted to buy, Evans went to a mortgage company, where she qualified for a 203-K rehabilitation rehabilitation: see physical therapy. construction loan. The company then told her that she would have to use its contractors to bring the building up to code. It also stipulated that she hire its inspector, who convinced Evans to sign off on poor electrical wiring Electrical wiring in general refers to insulated conductors used to carry electricity, and associated devices. This article describes general aspects of electrical wiring as used to provide power in buildings and structures, commonly referred to as building wiring. , inadequate support beams, and bad plumbing--work Evan's untrained eye couldn't evaluate. When she, against the company's protests, hired her own inspector, and then a lawyer, Evans was already out more than $33,000. She does admit that she was too trusting. "I should have done my homework," she laments, "but I didn't think they would be so dishonest." The Better Business Bureau reports that in the year 2000, 2,902 complaints were made against mortgage and escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. companies. Out of 1,000 types of businesses tracked, mortgage and escrow firms rank 30th in the number of complaints received. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. expert Joe Cuttone, president of American Fidelity Mortgage Services Inc. in Wheaton, Illinois, anyone who is thinking of purchasing a home, or even refinancing Refinancing An extension and/or increase in amount of existing debt. an existing one, needs to know what to watch out for. HIDDEN FEES "All fees are to be outlined on both the Good Faith Estimate, which states interest rate, amount of mortgage, and loan terms, as well as all fees, and the Truth in Lending form, which breaks down the total financial evaluation," explains Alice Long, a processor for Cidmortgage in Farmington Hills Far·ming·ton Hills A city of southeast Michigan, an industrial suburb of Detroit. Population: 81,400. , Missouri. "It is mandated by law that a customer receive these forms within 72 hours of filling out the initial forms." These fees are technically only hidden from the consumer by how they are presented or explained. "When you receive the Truth in Lending forms," explains Ingrid Compton, assistant manager of Fillmore Real Estate in Brooklyn, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , "it is important to compare notes from your initial meetings to make sure everything is presented exactly how you previously discussed it." EXCESSIVE FEES Prospective home buyers with poor credit ratings are considered high-risk customers. Unfortunately, they are the most at risk for unscrupulous lending practices. There are mortgage companies that target these clients specifically because they are easy marks for excessive fees. One way to raise the cost of a mortgage loan to the consumer is by charging high points on the loan. Since one point equals 1% of the loan amount, what is a fair amount of points to charge? "One percent to 3%, depending on the size of the loan," says Cuttone. There are mortgage lenders who will charge up to 7%. BAIT AND SWITCH A deceptive sales technique that involves advertising a low-priced item to attract customers to a store, then persuading them to buy more expensive goods by failing to have a sufficient supply of the advertised item on hand or by disparaging its quality. Claire Thorp, a representative of the Office of Banks and Real Estate, an Illinois state government agency that works to protect and inform consumers, says that a lender who baits a customer with a fair set of mortgage terms but later attempts to switch to more expensive terms (which could actually be the real terms of the loan based on the customer's credit status) is guilty of "bait and switch." Because factors vary from state to state and from person to person, consumers should research the terms of a loan before signing. Helpful Resources * Federal Trade Commission (www.ftc.gov, 877-382-4357) *Www.federalreserve.gov offers consumer information, help, and advice. * Www.consumerworld.org * Office of Banks and Real Estate (www.obre.state.il.us, or call 877-793-3470) Sonia Alleyne E-mail: alleynes@blackenterprise.com |
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