Just got a mortgage? Beware of the junk mail

August 18, 2011

Buying a new home (or refinancing your old one) comes with a typically unwelcome peril: a deluge of junk mail.

While some of the attempts will be obvious scams to separate you from your money, there will be some offers that might a bit less obvious. They can take the form of something very official-looking or contain language that makes it appear as though your mortgage-holder is the sender.

A homeowner’s mortgage information is easy to find through public sources. Some entities sell that information to outfits that then target homeowners. The information can then be used to lend credibility when attempting to extract upfront fees. That’s usually not clear from reading the mailings. There often will only be a tiny disclaimer at the bottom disavowing a connection to the lender cited  in the mailing.

Here’s some of the language from one mailing that keeps making the rounds in slightly varying forms:

Bank of America realizes that sometimes things happen that are out of your control which can keep you from meeting your most important financial obligations … We would like to discuss your current loan situation to determine if you qualify for one of the Bank of America workout options … We have reviewed your property information and have determined that you may be eligible to modify the current terms of your mortgage.”

As much as the mailing, which resembles a W-2 form, appears to be connected to Bank of America, it isn’t. The Massachusetts Office of Consumer Affairs and Business Regulation said it recently heard from one consumer who bit on the offer and ended up spending $3,000 and received nothing in return.

“Consumers should run, not walk, away from these mailed offers,” said Barbara Anthony, who runs the office. “These companies cannot do anything beyond what a homeowner can do for herself, and in many cases they take a consumer’s money and personal information and do absolutely nothing.”

Not every mailing is a scam, but those that seek cash up front are the type Anthony is warning about. Consumers who receive these kinds of mailings are encouraged to report them to their attorney general’s office and the Federal Trade Commission.

If you’re actually interested in refinancing or restructuring a loan, you should contact your lender directly.

A Bank of America spokesman said these mailings are an industry-wide issue.

“While these solicitations may make reference to the lender, recipients should use caution and know who they are working with before doing business,” spokesman Rick Simon said. “The point the industry and government make (beyond knowing who you’re dealing with) is that modification assistance is available at no cost from servicers and HUD-approved non-profit counselors, so any company asking for payment should be approached with caution.”

While consumers can avoid those sorts of situation by awareness and bringing questionable mailings to the attention of the authorities, there doesn’t appear to be any mechanism to prevent shady outfits from getting your real estate information.

“First of all, home sales are public record. So data brokers can compile this information and sell it to advertisers,” said Paul Stephens, director of policy and advocacy for the Privacy Rights Clearinghouse. “Second, the credit reporting agencies engage in the practice of selling ‘trigger leads.’ When you apply for a mortgage, an inquiry will be generated on your credit report. The (agency) then sell lists with names of individuals who have applied for a mortgage to other companies.”

That will also generate a lot of target mail, such as coupons or a welcome letter from contractors or a home improvement store. You can filter out some of that by going to the Direct Marketing Association’s site and opting out of some of the mailing lists. And you can go to this site maintained by the credit bureaus to opt out of pre-screened offers.

Your last line of defense is the trash can.

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