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CFPB Reminds Homeowners to be Aware of Loan Scams After a Natural Disaster

by devteam October 31st, 2012 | Share

The Consumer Financial Protection Bureaurn(CFPB) reposted one of its earliest blog postings today to help the victims ofrnHurricane Sandy avoid the types of crimes that invariably follow any big disaster.  The Bureau said consumers should be watchfulrnas they start the clean-up and repairs and be aware that some crooks live forrnthe opportunities a disaster presents. rnHomeowners can be victimized by shoddy workmanship or by persons usingrnthe access a disaster presents to set victims up for larger scams. </p

Cleanup from a disaster can be expensivernand unfortunately many families don’t have a ready source of emergency fundsrnand the need to borrow many in a hurry can make storm victims easy targets forrnfinancing schemes. For examine, in the “home improvement loan scam” arncontractor comes to the homeowner and proposes repairs at an attractive raternand offers to arrange the financing. rnEven where the homeowner is reluctant he can pressured by threats tornleave the work undone unless he signs a bewildering number of papers and formsrnwhich only later does he realize have obligated him to a home equity loan withrnhigh interest and points and with his house as the collateral.  Then the work is done poorly or may not even berncompleted.  </p

CFPB offered homeowners some commonrnwarning signs that should alert them to potential scams.  </p<ul class="unIndentedList"<liThe contractor demands full paymentrnup front or in cash only.</li</ul<ul type="disc"

  • The contractor has no physical address or refuses torn show ID.</li
  • You have to disclose personal financial informationrn (perhaps to “speed up payment”) to start the repair or lending process.</li
  • If you have to borrow to pay for the repairs, thern contractor steers you toward a particular lender or tries to act as anrn intermediary between you and a lender.</li
  • You are asked to sign something without enough time torn review it.</li</ul

    When you are planning your clean-uprnand repairs CFPB advisers homeowners to take the following precautions:</p<ul type="disc"

  • Carefully question strangers offer to do work withoutrn being asked.  </li
  • Never give any personal financial information, such asrn an insurance number or Social Security Number.</li
  • Read and be sure you understand every document beforern signing it and ask questions about anything you do not understand.  </li
  • Do your own research before borrowing any money to payrn for repairs.</li
  • Get a loan quote from someone who is not recommended byrn your contractor and compare their amounts, repayment schedules, and rates.rn If they differ significantly, ask both parties why.</li</ul

    Even persons far removed from Sandy’srndestruction can be targeted by crooks with phony charities or investmentrnschemes.  The CFPB’srnblog post has other tips and resources to help consumers avoid theserndisaster-related problems.   

    All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

    • About the Author

    devteam

    Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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