Investor Issues
6 Ways to Protect Yourself from a Mortgage Scam
Borrowers should be wary of so-called promised interest rates when shopping for a mortgage or loan
 
Mortgages are enough of a headache without unscrupulous lenders who lock you in with costly upfront fees for interest rates that they can’t — nor even intend to — deliver. 
 
But that’s exactly what Amerisave Mortgage Corporation did in a scheme that snared tens of thousands of consumers between 2011 and 2014, according to the Consumer Finance Protection Bureau (CFPB), which recently fined the online mortgage lender and an affiliated company about $20 million over the deceptive advertising allegations.
 
“By the time consumers could have discovered the advertised low rates were too good to be true, they had already committed to pay hundreds of dollars to Amerisave,” CFPB Director Richard Cordray said in a statement.
 
The bureau said Amerisave employed a bait-and-switch scheme that lured consumers to apply for a mortgage by advertising inaccurate interest rates on third-party websites, and by providing “misleadingly low quotes” based on inaccurate credit score calculations on its own website.
 
In addition, consumers had to give consent to be charged for the loan and lock in payment schedules before they even received the details of the total costs in the Good Faith Estimate (GFE), the bureau said. By setting consumers up for payments before providing the GFE, the bureau said Amerisave violated the Truth in Lending Act and the Real Estate Settlement Procedures Act.
 
About $15 million of the $20 million will go toward consumer refunds for those who were harmed when Amerisave failed to honor its advertised rates. In the bureau’s consent order, Amerisave neither admitted nor denied the allegations.
 
How to protect yourself from a mortgage scam
So, the takeaway here is that consumers should be wary of so-called promised interest rates when shopping for a mortgage. Here are six pointers from the bureau that could help prevent you from becoming a victim of a mortgage scam:
 
You can’t be charged any fees — outside of a credit report fee — until you get the GFE form listing the basics of the mortgage loan for which you’ve applied.
 
You may be able to reduce your interest rate at closing by paying “discount points,” or prepaid interest, on your mortgage loan. Conversely, you may also be able to opt out of upfront fees in lieu of accepting a higher interest rate. But before you decide to do one or the other, talk to a trusted financial advisor other than your lender.
 
Beware of the risky features associated with some loan offers, such as negative amortization and interest-only periods. Both features do not decrease the amount that you borrowed, and negative amortization actually increases your balance by not having you pay interest on what you owe.
 
Know the difference between a fixed-rate mortgage, in which the interest rate will not change, and an adjustable-rate mortgage, in which the interest rate may fluctuate. While an adjustable-rate mortgage (ARM) may start at a lower interest rate than a fixed-rate mortgage, it’s likely to go up after an introductory period ends.
 
Look at the annual percentage rate in addition to the interest rate. The annual percentage rate, or APR, incorporates the interest rate as well as discount points, fees, and other charges. But the bureau warns to take care when comparing the APRs of adjustable rate mortgages where interest rates may go up and down.
 
Go offline in your mortgage search and contact banks, credit unions, and other lenders. Build a list of current interest rates for available loans and find out when they were quoted. Get as many details as possible, including what type (fixed or adjustable) and what discount points and fees are tied to the mortgage.
 
For more tips to remember when shopping for a mortgage, click here or visit consumerfinance.gov/mortgage
 

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India slips to 71st rank in global competitiveness list
WEF says India's new government faces the challenge of improving competitiveness and reviving the economy, which is growing at half the rate of 2010
 
India has slipped to 71st position -- the lowest among BRICS countries -- in an annual global competitiveness list, where Switzerland remains on top of 147 countries.
 
The annual list, released by Geneva-based World Economic Forum (WEF), comes at a time when the new Indian government has completed 100 days in power and has promised further steps to revive its economy and the ease of doing business in the country. 
 
"Continuing its downward trend and losing 11 places, India ranks 71st. The country's new government faces the challenge of improving competitiveness and reviving the economy, which is growing at half the rate of 2010," WEF said. 
 
According to the report, India's slide in the competitiveness rankings began in 2009, when its economy was still growing at 8.5%.
 
"Back then, however, India's showing in the GCI was already casting doubt about the sustainability of this growth.” the report said. The fall in the GCI rank of India over the years is shown in the chart below:
    
 
"Since then, the country has been struggling to achieve growth of 5%. The country has declined in most areas assessed by the GCI since 2007, most strikingly in institutions, business sophistication, financial market development, and goods market efficiency," it added. 
 
Noting that improving competitiveness would yield huge benefits for India, WEF said it would help re-balance the economy and move the country up the value chain ensuring more solid and stable growth. 
 
"This in turn could result in more employment opportunities for the country's rapidly growing population," it added. 
 
As per the Global Competitiveness Report 2014-15, Switzerland is the most competitive economy, followed by Singapore and United States. The scores of the BRICS countries are shown in the chart below:
 

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COMMENTS

shadi katyal

2 years ago

Why should come this as a surprise. We have neither the resources nor the will to move up. We have lived in denial for so many decades that it has become a part of our daily life.
One would have thought that after implosion of Russia and our PSU running red, we would move away and try market economy but the bureaucrats who run such PSU donot wish to kill the golden goose even if the nation bleeds. So they came with new scheme and Permit Raj became nothing but begging bowel. Either the new projects are greased ion advance or no permit. Than we got smart and decided to shoot ourselves by retroactive tax on videophone.
We disappointed the world economist with our no ethics to work and indiscipline and small nations like Vietnam got more investment than India.
Can Modi do better, one doubts because it is the people and unless they are unblocked from the chains of religious hate and diverted to productivity nothing will change.
We are unfortunately devoting our talent to wrong issues.
We need power and SC decided to start this now while all those years it slept.
We need Laws of industry and labour to e amended.
We are fooling ourselves with talk of 100 days when we have failed in the past.
It is time to forget UPA or NDA, BJP or any other party but
to think of nation and leave who wins the crown.
:Leave the investors to decide where and when they wish to spread the industry just facilitate them with power, land and efficient labour. Government of India must get our of the way and throw red tape for ever and let nation develop[.
Talk of what went wrong is waste of time we should learn where we made mistakes and move on. This redundant talk of how UPA failed does not bring any ethics to work

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