It doesn’t matter what industry you are in, chances are there are scammers in just about every profession. And it’s only getting worse. 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 my industry, 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 loan officer 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. Most loan transaction fees can be rolled into the loan amount or into the closing costs 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 lender, before handing over any cash.
#2. A lender that says every loaner program out there is available to you.
This clearly is not a loan officer that’s doing their job. Many lenders specialize in specific types of loans such as refinance, FHA, VA, home loans, personal loans or investment loans. If a scammer says that they can handle any loan and that you can qualify for anything, it probably is too good to be true.
#3. A lender promising guaranteed approval.
No lender can offer guaranteed approval without going through the proper steps 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, stay far away. The credit history is often the first line of defense when it comes to finding the right loan and approval for a borrower.
#4. A loan officer requiring quick decisions.
I’m not talking about locking in certain rates, because sometimes we need to move quickly on those, especially if they’re going to change within a few weeks, but, if a loan officer is pressuring you to make a decision today, lock in a rate or 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 great lender, and a reputable one, at that, will let you take your time and feel comfortable about your purchase all the while reminding the borrower of any urgency needed down the line.
#5. No license.
You might think that borrowers would be crazy to go with a loan officer without the required license 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 display the licensing information at their business address. If a lender cannot produce this license on short notice, 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.