Watch Out For These Home Equity Loan Scams | Shawn Shai Halahmy

• Equity stripping: A scammer offers a loan based on your home’s equity, ignoring your ability to repay. The loan often includes extremely high interest rates, hidden fees, or balloon payments, which leads to you defaulting and the scammer seizing your home.
• Account takeover fraud: Using stolen personal information obtained through phishing, mail theft, or data breaches, a fraudster accesses your Home Equity Line of Credit (HELOC) to transfer funds or make unauthorized withdrawals.
• Fake foreclosure rescue: Scammers target homeowners behind on payments with promises to save their home, charging large, illegal upfront fees for services they never deliver. They may also instruct you to send your mortgage payments to them instead of your lender.
• Signing over the deed: A scammer convinces you to “temporarily” sign over your property deed with a promise to refinance your loan or save you from foreclosure. Once they have the deed, they can take out new loans against your home or sell it, leaving you evicted and still responsible for your original mortgage.
• Home improvement scams: A contractor pressures you into taking out a home equity loan to pay for renovations. The contractor may charge an inflated price, perform shoddy work, or disappear with the funds without completing the project.
• Loan flipping: A predatory lender repeatedly persuades a homeowner to refinance their mortgage, charging new fees and closing costs each time to erode the homeowner’s equity.
• Bait-and-switch: A lender offers one set of favorable loan terms but changes them at the last minute and pressures you to sign. 

• Be wary of unsolicited offers. Be cautious of lenders who contact you unexpectedly by phone, mail, or door-to-door, especially if they seem to know about your financial situation.
• Never pay upfront fees. Legitimate mortgage relief and loan modification services will not charge you upfront for their services.
• Ignore high-pressure tactics. Any lender who rushes you to make a decision or sign documents is likely a scammer. Legitimate offers will still be available tomorrow.
• Consult a HUD-approved housing counselor. These professionals can help you understand your options and will not charge you for foreclosure prevention advice. You can find a counselor through the U.S. Department of Housing and Urban Development (HUD).
• Research the company. Look up any potential lender or contractor with the Better Business Bureau (BBB) and check for online reviews and complaints. For home equity lenders, you can also verify their license with your state’s financial regulatory agency.
• Don’t sign blank or vague forms. Always read all documents thoroughly before signing. If a form has blank spaces or confusing terms, ask for an explanation or have an attorney review it.
• Monitor your accounts and credit. Regularly check your credit reports and HELOC statements for unrecognized activity. Consider placing a credit freeze for additional protection.
• Work with people you trust. Get independent advice from a trusted financial advisor or attorney. Never sign over your deed to anyone without legal counsel.
• Call your lender directly. If you receive a suspicious message or call from someone claiming to be from your lender, hang up and call the company directly using a number from their official website. 

• Cease all contact with the suspected scammers.
• Gather and keep all records of your interactions.
• Report the scam to the Federal Trade Commission (FTC) at ReportFraud.ftc.gov.
• File a complaint with the Consumer Financial Protection Bureau (CFPB).
• Report it to your state’s Attorney General’s office.
• File a police report if you believe you are a victim of identity theft. 

Shawn Shai Halahmy