Attorney General Bill McCollum issued a consumer advisory, warning Floridians of common mortgage fraud scams. Mortgage scams ranked among the top 10 categories of complaints received by the Attorney General’s office last year.
Home equity scams come in several variations. Equity stripping occurs when a lender encourages a consumer to manipulate their loan application in order to qualify for a greater loan amount. Loan flipping involves lenders who repeatedly encourage consumers to refinance their loans, which may require them to borrow more money and, as a result, accumulate higher fees. Other scams include baiting and switching, where the lender offers one set of terms prior to the loan application and then pressures consumers to agree to a different set of terms after signing the application. Deceptive loan servicing, another common complaint, happens when lenders do not provide their clients with accurate or complete account statements and payoff figures.
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