VA loans

VA Loans and Foreclosure Scams

June 17, 2011

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VA Loans and Foreclosure Scams

The government aggressively investigates claims of discriminatory lending practices, violations of the Fair Housing Act, and other issues that affect military and civilian home buyers alike, but there’s an equally troubling issue facing borrowers in a continually struggling housing market; foreclosure scams.

Housing scams and real estate fraud have always been with us–any time you have a high-value investment such as a new home purchase with a VA loan or FHA mortgage, there will be people who try to take advantage of borrowers in trouble. Since the housing market crisis in 2008, scammers have found a variety of inventive ways to prey on VA borrowers afraid of losing their homes.

The Department of Housing and Urban Development wants consumers to know about foreclosure avoidance programs, the VA has plenty of foreclosure avoidance counseling and intervention available for veterans, and all of this assistance is free.

The Department of Veterans Affairs, HUD, and the FHA warn borrowers that fee-based foreclosure avoidance counseling service is often one of the first warning signs of a scam in progress. You don’t have to pay money to learn how to save your home from foreclosure.

The same applies to those who require a fee in exchange for loan modification–all reputable agencies warn their clients, customers or counselees to beware of any company charging you a fee in order to apply for or receive loan modification, especially when that fee is coupled with high-pressure sales tactics.

Such “do it right now!” tactics are commonly used in scams–it’s an effective type of psychological leverage used against those anxious to save their homes and avoid being foreclosed upon. Never give in to such pressure, never “sign now”, and don’t agree to any proposal that involves the borrower signing over the deed to the home to someone else until you have contacted a VA housing counselor for more information and advice.

In such cases, it’s highly likely the terms of such a deal is NOT friendly to you as a VA borrower. Consider the advice of the government’s Making Home Affordable website, which states, “…do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.”

In some legitimate instances your mortgage company may ask you to sign over the deed–but you shouldn’t allow a third party to convince you to do so, nor should the borrower ever make a mortgage payment to anyone other than the mortgage company without their express approval. Ask a VA professional for advice before agreeing to any such moves.

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