It doesn’t matter the industry, there are scammers in just about every profession looking for opportunity. We really need to keep our feelers up when it comes to scams, hackers, and those just trying to get your money or your identity. Even in the loan industry, this is becoming a hassle, much more than an inconvenience, but a source of deep frustration for those looking to buy a house or refinance. In mortgage world, there are big red flags to look for so that you know your loan officer or mortgage officer is not ripping you off and keep you from being scammed. Here are the five most important ways you can tell that a lender is just not aboveboard.
#1. The ask for money up front.
This is one of the most obvious red flags. A scammer may call this an insurance fee, processing fee, advance payment or some other kind of deposit and they may even say it’s a standard procedure. But those lenders require you to wire the money through the Western Union or some other similar service, be on the lookout. This is probably a scam. We do not ask for money upfront! Most loan costs are paid at the closing or can be rolled into the loan and you shouldn’t have any out-of-pocket expenses right off the bat. There may be some legitimate reasons why a lender would want money upfront such as for a credit report or an appraisal fee but that’s usually a very small amount. It’s important to know who you’re dealing with, not just the bank itself but the individual loan officer before handing over any funds.
#2. A lender that says every loan program out there is available to you.
This clearly is not true and that loan officer isn’t doing their job or you a service. Many lenders specialize in specific types of loans such as Jumbo, FHA, VA, UDSA, Down Payment Assistance or investment loans. If a scammer says that they can handle any loan in any state and that you can qualify for anything, it probably is too good to be true.
#3. A lender promising guaranteed loan approval.
No lender can offer guaranteed loan approval without validating your documentation first. Be very cautious of any lender that promises you the moon. If they say you will get approved regardless of your credit history and no credit check, run far away. Your credit history is often the first line of defense that determines risk when it comes to finding the right loan and a loan approval for a borrower.
#4. A lender requiring quick decisions.
We’re not talking about locking in interest rates in a volatile market, because sometimes we need to move quickly on those, especially if the bond market is moving, however if a loan officer is pressuring you to make a decision today, handover money right away for fear of missing out, it’s time to back off. Many hackers and scammers use this ploy to ensure that the borrower doesn’t have the needed time to research the lender enough. A reputable lender will let you take your time and help you feel comfortable with your decisions all the while reminding you of any urgency needed down the line.
#5. No license.
You might think that borrowers would be crazy to use a loan officer without the required licenses but most people don’t even question it. Legitimate loan officers and lenders will have licensing, registration and or affiliations with professional organizations. Most of them are also required to be licensed and registered with the NMLS national registry. If a lender is not on the approved list, that could be a big red flag.
The last thing you want is to get involved with the lender that is trying to scam you out of your money, your livelihood and your security. Make sure you go with someone you trust and ask for referrals on how well a lender did with a certain loan before jumping in. Most banks, reputable or national mortgage lenders and even small-town credit unions will have reputable lenders on hand to help you. Don’t just go with the lender that looks the previous or sounds the best.
I’d be happy to go over any upcoming programs or lending options that might work for you both now and in the future.
Feel free to give me a call!