The impact of COVID-19 has led to financial struggles for homeowners across the nation. A recent study conducted by OnePoll, in conjunction with the National Association of REALTORS®, discovered that the pandemic has caused unexpected financial distress for more than 80% of American homeowners.
“REALTORS® are in the business of helping people become homeowners and want to do everything they can to ensure people are able to stay in their homes despite financial hardships,” said Michelle Bailey, 2020 President of Boise Regional REALTORS®. “Unfortunately, scams related to mortgage relief or loan modifications tend to increase during times like these, so homeowners should be cautious of offers that sound too good to be true.”
Here are some warning signs that an offer of financial assistance could be a scam, or that a mortgage modification may include unfavorable loan terms:
- Sounds too easy. “Guaranteed approval” or “no income verification” regardless of borrower’s current employment, credit history, and assets.
- Large future costs. High-risk adjustable rate mortgages (also referred to as ARMs) where the monthly payment rises significantly after a short “teaser rate” period.
- Barriers to refinancing. Prepayment penalties that make it hard for a borrower to refinance in order to pay off a high-cost loan by taking advantage of a low-cost loan.
- No down payment loans. These loans may actually be split into two mortgages, with one having a much higher rate or monthly payment. Borrowers should be clear if this is the case and confirm they can afford both payments.
- Unethical document management. Ethical lenders and brokers will never ask borrowers to sign a blank document or a document dated before the date they sign.
- Charging a fee for assistance. Borrowers should not pay fees to a third-party offering advice or financial assistance, especially if it was not requested. This is different than closing costs related to refinancing, which the lender should be able to explain clearly.
“If you are a homeowner who is struggling or unable to meet your loan obligations, work with housing experts and your lender to find a solution today — especially considering the historically low mortgage rates that may be available,” added Ryan Froehlich, 2020 President of the Idaho Mortgage Lenders Association. “Don’t wait until you fall behind to seek help. Acting quickly may help you keep your home and the money you have already invested into it.”
Contact your REALTOR®, your mortgage lender, Idaho Housing and Finance Association at idahohousing.com/housing-advice, or NeighborWorks Boise at nwboise.org/covid-19-mortgage-assistance, for resources and trusted assistance.
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Boise Regional REALTORS® (BRR) is a 501(c)6 trade association, representing real estate professionals throughout the Boise region. Established in 1920, BRR is the largest local REALTOR® association in the state of Idaho, helping members achieve real estate success through ethics, professionalism, and connections. BRR has two wholly-owned subsidiaries, Intermountain MLS (IMLS) and the REALTORS® Community Foundation.
REALTOR® is a federally registered collective membership mark which identifies a real estate professional who is member of the National Association of REALTORS® and subscribes to its strict Code of Ethics.
