My Mom Got Scammed Trying to Refinance Her Mortgage

There’s not much worse than a scammer. Except maybe one that takes advantage of older people who are already having financial difficulty. As a warning to others, Samantha Savory was kind enough to share her Mom’s story about being defrauded when trying to refinance her house. Here’s her story…

Mortgage Refinance Scams

Don't fall for this refinance scam.

I remember hearing ridiculous stories from friends and co-workers about people who they knew losing thousands of dollars to credit card or mortgage scams.

I always thought to myself ‘What a bunch of dummies!’

Right away I was overly judgmental and never fully understood how someone could be so stupid to fork over money to a stranger.

That was, until it happened to my mother.

My Mom’s House and Mortgage

My mom has lived in the same home in South Florida for nearly 25 years. She has always paid her mortgage on time and never asked for a handout. Five years ago, when the economy was thriving and no one, other than perhaps lending and banking insiders, knew the housing bubble was about to burst my mom refinanced her mortgage to get a temporary lower interest rate.

In laymen’s terms, the refinance offered a low fixed interest rate for the first 5 years and the remaining 25 years of interest would be at an adjustable rate and could go as high as 14.5%. Anyone who knows anything about mortgages should know that an interest rate in this market that is above 7% is a complete rip off.

Unknowingly she signed a contract that stated if paid to as agreed would force her to pay over $500,000 in interest for a $300,000 loan. In 2005, my mother’s home was estimated to be worth nearly $500,000, but in today’s market, it isn’t even worth $300,000.

A Reason to Think Twice About Adjustable Rate Mortgages

One year before my mom’s mortgage payment would jump from $1,500 to $2,300, she went to Bank of America and tried to refinance. They wouldn’t talk to her because technically she and her husband made enough money to pay the monthly mortgage amount, and the bank would not reap any benefits from trying to help my mom. Also, a person needs an almost perfect credit score to be able to refinance, which my mom does not have.

Enter the Low Life Scammers

Two weeks went by and my mother started getting calls from telemarketers claiming they work at mortgage refinance companies and that they could help her. For some strange reason, my mom ended up believing a person who claimed he worked at “The Hardship Center” which according to the email signature was a debt settlement association approved company.

Quick side note: The problem is no matter how many degrees my mom has and how educated I assumed she was, she did not know that debt settlement firms are usually scams and are BAD. She also did not know that getting a mortgage modification or refinance has absolutely NOTHING to do with debt settlement. People who don’t work in the debt or finance arena don’t understand the differences between legitimate companies that help people save their homes or pay off debt and scam artists.

Back to the story — the telemarketer from “The Hardship Center” told my mother that in order to get her home refinanced she needed to pay an upfront fee of $2,500.

You probably already guessed that my mother transferred funds from an online account to this guy. Ironically she transferred the money from her Bank of America checking account, the same bank that rejected her from a legitimate refinance.

Uncovering the Scam

Nearly 3 weeks later, the salesperson’s email stopped working, the “Hardship Center” website URL was gone and no one was answering the phone. My mom then realized that someone took advantage of her and scammed her for thousands of dollars.

My mother was so desperate not to lose her home or pay an outrageous monthly mortgage payment; she thought there was a quick fix and fell for a slimy salesman’s tricks. Shortly after, my mom did some investigating with her best friend, known as Google, and read on the Better Business Bureau’s site that there were complaints about this company scamming other homeowners.

Think you’ve been scammed? Be sure to check out these 6 essential resources for fighting back.

Needless to say, my mom has learned many lessons. Two of the biggest:

  1. Don’t ever refinance or buy a piece of property without a lawyer present to read the contract and the fine print.
  2. Don’t trust any company that wants you to give them thousands of dollars for a quick fix because 99% of the time, it’s a rip off.

Have you had a similar situation? What are some of your tips for avoiding scams like this?

Samantha Savory is a regular blogger for whose mission is to provide expert money management advice, promote financial literacy, and keep readers in the know about the best ways to save and spend their money.

Image by OlgerFallasPainting

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Last Edited: December 19, 2011 @ 11:40 am