Fraud facts: If it sounds too good to be true, it probably is

By Christa Buchanan
C & G Staff Writer

When it comes to real estate, people trust that those who are “experts” in their fields are honest and upfront about their business practices — be it their attorney, mortgage broker, appraiser or real estate agent.

People expect to get what they pay for and trust they will receive good, solid advice, not be swindled.

Unfortunately, if the current crumbling housing market is any indicator, being swindled is exactly what has happened to literally thousands of Americans who have lost their homes due to fraud, or in some cases, a lack of knowledge or buying more than they could afford.

“Sometimes people think they are the victim of fraud, when they actually aren’t. They just entered an agreement without understanding the details of it,” said local Realtor, author and consumer relations advocate Ralph Roberts, who owns Ralph Roberts Realty in Washington Township and runs a branch of the Federal Loan Modification Law Center LLP, a national loan modification company, in Sterling Heights.

“Don’t sign anything unless you’ve read and clearly understand what you’re signing and agree to it. If in doubt, ask questions. If still in doubt, consult a qualified real estate attorney,” he advised.

And, when it comes to getting a mortgage, or a real estate agent for that matter, it’s always a good idea to shop around.

“I always recommend checking with at least two places (mortgage companies). … Obviously, the best way to find a mortgage company is to get referrals from friends and family who had good experiences,” said Ken Appelt, president of Standard Mortgage and Standard Development in St. Clair Shores.

Appelt and Roberts say it’s also a good idea to check with the Better Business Bureau, www.bbb.org; the National Association of Mortgage Brokers, www.namb.org; the state Attorney General’s Office, www.Michigan.gov/ag; or if the company or individual is local, the Chamber of Commerce to see if the individual or company is up to par.

“Work with licensed, certified professionals. If the person holds a certification, for example, check with the organization that certified the person to verify. Work with individuals who have professional associations and check with the associations to make sure the person is a member in good standing,” advised Roberts.

“Google the company or the individual by name to see if other consumers have posted negative comments about them,” he added, noting that “not all negative comments are valid, so you can’t believe everything you read, but you may be able to spot trends.”

An experienced broker also can make a huge difference, said Appelt.

“A good, experienced broker will give copies of all documents and explain them in detail so that their clients understand all aspects of the agreement,” he said, adding that consumers should seek out a broker with at least five years’ experience and a good track record.

According to the Mortgage Asset Research Institute (MARI) Web site, www.marisolutions.com, Michigan was ranked third in a three-way tie of the top 10 states for mortgage fraud in the first quarter of 2008.

Since then, new legislation has been passed in Michigan to help alleviate some types of fraud, including stricter policies on agent disclosure forms, and stricter legislation and education requirements for lenders, brokers and appraisers, among other measures.

“Now all mortgage brokers must be licensed through the state, and they have to display that license,” said Appelt, adding that brokers must pass a state-certified test, and if they have less than five years’ experience, they are required to take 40 hours of classes before taking the test.

Even with new legislation, the potential for fraud exists: The continuing poor real estate market, the experts say, is bound to spawn more fraud, both fraud for property and fraud for profit. 

“There are a lot of places advertising loan modification and charge a fee for things homeowners can do themselves. People should really call the lender they are currently with to try to work things out before going to an outside source for help,” said Appelt.

That’s not to say that all foreclosure rescue or short services are not legitimate — some are, said Roberts.

“Nothing is wrong with a company or individual charging a fee to help consumers negotiate a short sale with their lenders. The fees, however, should not be exorbitant, and the company or individual should deliver on their promise,” he said. “Just make sure you check them out carefully, work only with brick-and-mortar businesses that have real addresses and phone numbers, and verify everything they tell you with someone who knows foreclosure law,” Roberts advised.

Overall, Appelt and Roberts agree: Trust your instincts. If you don’t feel right about it, don’t do the deal.

Standard Mortgage and Standard Development can be reached at (586) 776-7900. Ralph Roberts Realty and Federal Loan Modification Law Center can be reached at (586) 751-0000.  The U.S. Department of Housing and Urban Development’s Web site, www.HUD.gov, boasts a wealth of information about real estate fraud, avoiding foreclosure and other real estate issues.  For foreclosure counseling, call (800) 569-4287 to speak with a HUD housing counselor.

You can reach Staff Writer Christa Buchanan at cbuchanan@candgnews.com or at (586) 498-1061.