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Hedy’s Hints: 10 ways to spot a mortgage scammer

With instances of mortgage fraud on the rise, are you aware of how to spot a mortgage scammer?

Realtors have a good idea what to look for when it comes to fraudulent mortgage practices. However, that doesn't mean that plenty of people, real estate agents included, haven't been duped in the past. Scammers are often extremely clever and succeed by appearing, on the surface, to be very friendly and helpful people. If you know the signs to look for then you will probably spot a scammer before it's too late.

Without much further ado, here are 10 ways to spot a mortgage fraud. This list isn't an end-all, be-all fix for this problem, but it could help you at some point in the future avoid a shady business practice or two.

1. Mortgage provider wants money up front for assistance

This is an obvious give-away. If a mortgage provider needs your money up front, what's going to happen when you need money later on from them? The lesson here is to politely decline and see how they respond. If they react negatively, then it's time to find a new mortgage provider -- one that doesn't need your money up front.

2. Someone from the mortgage company offers to fill out your paper work

This is a big no-no. If it's important to read all the documentations when you're signing in a contract, it's just as important (and perhaps more important) that you fill out your own paperwork. If you give up that control, who knows what information they could distort in your name. You could be held liable for this type of thing too, since it is your name on the paper work.

3. They want to perform a "forensic audit"

A forensic audit is not something that a mortgage company should be doing. Rather, this audit of your economic affairs should be for use in a court of law. The IRS and FBI are in the business of forensic audits, not mortgage companies. Politely decline if a mortgage provider wants to perform this examination into your finances. They have no right to do this.

4. Mortgage representative wants payments made directly to them, not the bank

Mortgage payments should be made to a financial institution and not the person setting up your mortgage. This should be a big red flag for fraud if you are forced to pay someone and not the financial institution from which you're borrowing money. What happens if that person cashes your check and doesn't give it to your financial institution? You guessed it: you're on the hook for that payment still.

5. You are offered a guaranteed mortgage modification or foreclosure prevention

If this is offered to you, no questions asked, then be very careful. These two things are very difficult to promise and should be met with a healthy skepticism on your part. If those two guarantees can't be met, you'll be the one in serious trouble, not the individual helping your with your mortgage.

6. Someone recommends that you stop making mortgage payments

The truth of the matter is that if you stop making your mortgage payments, your credit rating will be adversely affected and you could lose your home. The person telling you this will get none of these consequences so keep that in mind if you decide to listen to this type of advice.

7. You are advised to rent your home and buy it back gradually over time

Be wary of this type of advice. You never know how future financial situations will work out. This is the proverbial rolling of the dice.

8. They require you pay in cash, with a cashier's check, or through a wire transfer

This is how scammers work. They deal in cash. Cashier's check's and wire transfers take money out of your account before it reaches its final destination and are often looked at as "as good as cash". Be very careful to avoid this scam tactic for you will have no recourse to reclaim your money.

9. You are asked to transfer the title or deed to your property to them

The old saying goes that possession is 9/10 of the law. Falling for this scam tactic will probably result in losing 100 percent of your stake in that property. That's not what you want to have happen.

10. You are requested hand over power of attorney

This is similar to the previous scam tactic. This gives the scammer complete control over your property and assets. Whatever you do, do NOT grant anyone power of attorney unless you know and trust someone fully.

Hedy Goldman has lots of knowledgeable information to share. She has been practicing real estate since 1996 and is a 2010 gold award winner at Windermere Real Estate SoCal. Hedy sells all over San Diego, but specializes in North County Coastal. She can be reached at (858) 504-2334 or San Diego Realtor.