The Independent Community Bankers of America (ICBA) has released an alert to help the public and those who do business with mortgage servicing firms avoid getting stung by companies offering fraudulent foreclosure and refinancing assistance.
As part of fraud prevention efforts, Notaries are advised to educate themselves on the fine points of how such scams are committed, in order to help protect both themselves and their signers from fraudulent foreclosure “rescue” companies offering to act as “go-betweens” between the borrower and lender during mortgage modifications.
According to the ICBA, consumers, Notaries and other mortgage servicers should be wary of any company that does the following:
- Guarantees its clients to stop the foreclosure process — no matter the circumstances
- Instructs clients to refrain from contacting their lender, lawyer, or credit or housing counselor
- Collects a fee before providing clients with any services
- Accepts payment only by cashier’s check or wire transfer
- Encourages clients to lease their home and buy it back over time
- Tells clients to make their mortgage payments directly to them, rather than the lender
- Urges clients to transfer their property deed or title to them
- Offers to buy a client’s house for cash at a fixed price that is not set by the housing market at the time of sale
- Offers to fill out all client paperwork
- Pressures clients to sign paperwork they haven’t had a chance to read or understand. This situation could be revealed during a Notary’s check for willingness and awareness.
Signing agents who are approached by companies for notarizations should also be on the look-out for certain warning signals that may expose an unscrupulous foreclosure rescue company.
- Are you asked to collect an upfront fee?
Many states have clear statutes prohibiting the collection of fees before services are rendered. If a company asks you to pick up a check, beware.
- Are you asked to notarize a power of attorney?
Statutes may prohibit a foreclosure rescue company from requiring a client to sign a POA. The danger in doing so is that the fraudulent “rescue” company could then take control of the property, and the owner would have no further recourse.
- Are you instructed not to leave copies of documents?
If a company is asking you to disregard standard signing procedures, such as leaving copies of documents for the signer to keep, this is a major red flag.
For more information on how to avoid bad loan modifications, and which acts are commonly prohibited by state statutes, NNA members can access our webinar on the subject. (The second half of the webinar focuses on how to detect and avoid companies performing such scams.)