Mortgage loan officer lead

IN the quest for the American Dream, buying a home is a top priority. And with enticingly low mortgage rates and record levels of home ownership, many people who never dreamed such a dream are seeking mortgages in an attempt to finance that dream. But sometimes the dream of home ownership can come with a cost.

Several potential home-buyers and homeowners have fallen victim to mortgage scares and even mortgage fraud in recent years--so much so that the Better Business Bureau reports that in 2003, mortgage and escrow companies ranked sixth in complaints filed with the organization.

At the very least, mortgage scares and fraud could cost you thousands of dollars in interest, high fees and additional costs. At the very worst, you could lose your home to foreclosure.

Experts say there are three common types of mortgage scares and fraud--bait-and-switch, identity theft through mortgage solicitation and loan-flipping. With information, preparation and a willingness to say no, experts say there are ways to guard against those scams and fraud.

1. Make sure that you understand all the terms, conditions, rates, fees and extras associated with your loan. Understand how much the loan is costing you--interest included--over the entire life of the loan. Shop around to see if there's a lower rate available. Don't let a lender pressure you into making a decision.

"If someone is trying to force you to make a decision, that may be a signal that something could be wrong," says Stacey D. Stewart, president and CEO of the Fannie May Foundation in Washington, D.C.

Anthony Armstrong, a licensed real estate agent at SSG Realty in Chicago, adds that even if you've reached the closing and the rates are not right--if the loan officer baited you with a low rate and then switched you to a higher one--it's not out of the ordinary to have a closing suspended on the spot. "It may be somewhat embarrassing, but it's easier to be embarrassed than it is to be stuck with a mortgage you don't want," says Armstrong. "You're not stuck. You're stuck only after you sign the mortgage documents."

2. Another problem to be aware of is mortgage solicitations by phone, door-to-door or Internet. Generally, these scams require you to fill out an application over the phone, fax or via the Internet, and the rates are sometimes bogus. But guess what? Even if the rates are legit, the company still has all of your information, including your name, address and social security number, which can lead to identity theft or mortgage fraud.

To combat this, try to avoid solicitations and work with mortgage lenders with whom you already have a relationship. Get mortgages that you initiate, avoid giving personal information over unsecured channels and make sure the company cannot share or sell your information.

3. A third type of scare is loan-flipping, which occurs after you've secured a loan and made a few payments. The lender tries to get you to take out a bigger loan if you agree to refinance. You may end up paying extra refinancing charges and saddled with debt you cannot afford.

Stewart of the Fannie Mae Foundation, which has published a series of home-buying guides, says the key to avoiding this is to borrow only the amount you need. Make sure that the payments are affordable based on your current income--not the raise or bonus you expect to get in three months and not the marriage you expect will someday boost your income.

The key is to arm yourself with information. Educate yourself as much as possible about the process. "With mortgages, don't be afraid to ask lots of questions; that's the biggest thing," says Armstrong of Chicago. "If something looks too good to be true, it probably is."

For more information about home-buying, go to www.fanniemaefoundation.org or call 800-688-HOME.