Of course, with Hurricane Irene comes the cleanup, which can be expensive. Unfortunately, many families do not have emergency funds and may need to borrow money in a hurry to make important repairs. This post-disaster stress can sometimes make us easier targets for deceptive lenders.
In particular, watch out for the “home improvement” loan scam. Here’s how the FTC has described this fraud:
A contractor calls or knocks on your door and offers to install a new roof or
remodel your kitchen at a price that sounds reasonable. You tell him you’re
interested, but can’t afford it. He tells you it’s no problem—he can arrange
financing through a lender he knows. You agree to the project, and the
contractor begins work. At some point after the contractor begins, you are
asked to sign a lot of papers. The papers may be blank or the lender may rush
you to sign before you have time to read what you’ve been given. The contractor
threatens to leave the work on your house unfinished if you don’t sign. You
sign the papers. Only later, you realize that the papers you signed are a home
equity loan. The interest rate, points and fees seem very high. To make matters
worse, the work on your home isn’t done right or hasn’t been completed, and the
contractor, who may have been paid by the lender, has little interest in
completing the work to your satisfaction.
Fortunately, there are things to watch out for and things you can do to avoid these scams.
- The contractor demands full payment up front or in cash only.
- The contractor has no physical address or refuses to show ID.
- You have to disclose personal financial information (perhaps to “speed up payment”) to start the repair or lending process.
- If you have to borrow to pay for the repairs, the contractor steers you toward a particular lender or tries to act as an intermediary between you and a lender.
- You are asked to sign something without enough time to review it.
Avoiding the scam:
- Carefully question strangers who show up and knock on your door, offering repairs.
- Never give any personal financial information, such as an insurance number or Social Security Number.
- Never sign any document without fully reading and understanding it. If you don’t understand something, ask for an explanation.
- Do your own research before borrowing any money to pay for repairs.
- Get a loan quote from someone who is not recommended by your contractor and compare their amounts, repayment schedules, and rates. If they differ significantly, ask both parties why.
The Department of Housing and Urban Development has information that can help you
be smart about home improvement loans. Find out more about federal and community-based programs, as well as general consumer advice. Your own state’s attorney general may also be a good resource to learn more or file a complaint.
These are not the only post-disaster scams you may encounter. For more information
about avoiding other types of scams like repair scams and charitable giving scams,
check out these resources:
- FTC Warns Consumers: Charity and Home Repair Scams May Appear After a Disaster
- The Missouri State Emergency Management Agency on Avoiding Scams and Fraud
- The University of Illinois Extension on Home Repair Fraud
I am a REALTOR with Liz Moore & Associates Also; I am part of the Liz Moore & Associates’ Military Team which specializes in homes for sale in James City County, Newport News, Hampton, York County, Poquoson, and Williamsburg, VA as well as surrounding markets. I offer Active Duty friendly support to families relocating to Langley Air Force Base, Ft. Eustis, Yorktown Naval Weapons Station, and Cheatam Annex. When you PCS to Hampton Roads, VA you will find that I understand that when a family member joins the military, the entire family belongs…thank you for serving our Country, and I look forward to serving your real estate needs!
When you are transferring to Langley AFB, Ft. Eustis, Yorktown Naval Weapons Station or Cheatam Annex, if you’re interested in buying a home for sale call 757-651-3763 or e-mail me at firstname.lastname@example.org