by Miles Morley, Legal Assistant
This is part five of a recurring series on the most common types of fraud reported in the Consumer Sentinel Network’s 2014 Data Book for the State of Michigan.
A common lending scam is the advance-fee loan. An advance-fee loan scam usually occurs when a party offers a loan or assistance in getting a loan, but requires you to pay upfront. Many of these loans will promise you a loan or credit card before processing an application or regardless of credit history. Often they will state that you have received approval, but a sum of money has to be paid for “processing,” “insurance,” “paperwork,” or “handling.” Normal lenders may charge these fees, but they do not require upfront payment as they will collect them from the distribution of the loan. Many scammers will also try to create a sense of urgency, while legitimate lenders will allow you time to shop around. Lenders in Michigan are required to be licensed by the Department of Insurance and Financial Services.
Foreclosure rescue fraud is a growing area of lender fraud that is sweeping the country after the collapse of the housing bubble. The most common of which ask a homeowner to pay money upfront, redirect their mortgage payments, stop making their loan payments, and/or sign over the title to their property. Scammers will often claim that a victim is eligible for a government program to reduce their mortgage payments or refinance their loan. Many scammers will instruct the victim to cease payments on their loan to gain modification or relief. This often leads the homeowner falling further behind on their mortgage and negative reports on their credit report. Victims of these scams lost an average of $3,248 at a time when they were in greatest need of assistance. The best defense to these scams is to research the programs or groups. Many scammers will create a website or reference an existing government program, but those that don’t will be eliminated quickly. You can also contact a housing counselor, who will assist in answering questions about these government programs, how they work, and their legitimacy.
If you have any questions or concerns about being the victim of a scam, contact the Legal Hotline for Michigan Seniors at 800.347.5297 or visit http://www.elderlawofmi.org/legal.
Miles holds a Bachelor of Science in Computer Information Systems from Baker College of Owosso, Bachelor of Science in Political Science from Lake Superior State University, and graduated with his Juris Doctorate in 2013 from Michigan State University College of Law.
Before joining the Elder Law of Michigan team, he served as an intern at the United States Coast Guard Headquarters . As a legal assistant at ELM, Miles provides legal advice, under the supervision of our hotline attorneys, to Michigan Seniors on a wide-variety of areas, including Medicare/Medicaid. As a website administrator at ELM, Miles is responsible for technology and programming projects.