The letter certainly looks official. It has a nice government appearing seal, the words "For Official Use Only" and even a nice little control number on the envelope. Once opened it appears to come from the city or state government and sometimes even the federal government or the president himself. In reality it is nothing more than a ploy to get your personal information and hook you into dealing with a shady group.
Solicitations of this type are not new and have been around for as long as mail and mortgages. Disappointingly, however, their numbers do not seem to have decreased in spite of promises from the Federal Trade Commission to investigate and prosecute.
Many of these letters begin by telling readers they have already been pre-approved for a federal rate reduction program and may even indicate this is part of the Economic Stimulus Act. One such letter sent to the writer's office today even indicated the home owner may be eligible for an $8000 tax credit on a purchase or refinance. In reality there never was a tax credit for refinancing and the tax credit for purchases expired on April 30.
Doing a quick search on Google for the name of the lender, an Ohio lending company, proves there are more complaints about their method of "advertising" than there is time to read. "If it sounds too good to be true it probably is", says Robert Rauf of The Real Estate Mortgage Network. He continues, "brings me back to the people that really thought they closed on a 1.9% fixed rate mortgage when everyone else was getting 6 or 7%."
Common advice from true mortgage professionals is to beware of anything you get in the mail that looks "official". This is also the advice of the Federal Trade Commission who would love to have copies of these letters and postcards sent to homes. IT takes a village to clean up an industry and that's just what Jeff Belonger and his organization at Mortgage Myth Busters is aiming to do.
Belonger says, "this stuff is alive and happens daily. And more now than ever before, because the public won't always know the difference. We need to keep getting this word out."
How is the public to know?
1. If you receive a solicitation in the mail from a mortgage lender appearing to be from a government organization or your lender but it just doesn't seem right it probably isn't. Call a trusted local authority and ask.
2. If the rate, closing costs or time it takes to close seems too good to be true it probably is. Again, instead of jumping in because your emotions are running high it is suggested by the professionals to contact a trusted local mortgage professional.
3. Remember mortgage loan professionals, except those who work at the bank, soon must pass stringent state and federal background exams, financial worthiness exams and pass detailed tests on mortgages and mortgage law. You can also check to see if the loan officer is actually licensed by going to the National Mortgage Licensing System Registry. Still, this alone is not a sign they are okay to deal with but it is an important step.
In the state of Georgia licensing is already a requirement as are the financial and criminal background exams.