THE HOME mortgage scammers and spammers are working overtime this spring, trying to tempt you into bad loans or to steal your personal data and sell it to the highest bidders.
The federal government wants your help in tracking them down.
Consider this recent e-mail promotion reported by multiple readers: "Dear Sir or Madam, Thank you for your mortgage application, which we received yesterday. We are glad to confirm that your application is accepted, and you get as low as 2.70 percent fixed rate. We ask that you please take a moment to fill out our online application."
The identical e-mail was signed with different names but the same affiliation: "Mortgage Broker Association." A hyperlink connected recipients to an application page seeking detailed personal information including home address, home value, current loan balance and interest rate, phone numbers and "credit rating."
The claims that applications had been received were bogus; no recipients had submitted applications. The hyperlink offered no sponsor identification, no security information regarding protection of confidential personal data and no way to contact the site sponsors with questions.
Here's another mass promotion received in recent weeks, this time by fax: "Last Chance! Rates won't get better than this. Rates as low as 2.95 percent TODAY!!"
The toll-free number connected callers to a telemarketer who asked, "Would you like to apply for a free quote?" The 2.95 percent rate turned out to be a trap. It was a "starting rate," not a true interest rate, and certainly not an annual percentage rate. The below-market teaser rate also produced negative amortization, a buildup of the amount of principal due on the loan rather than a reduction.
What about 30-year fixed rates? The telemarketer said they were at 5.24 percent with zero points, but a "loan officer" she referred me to quoted "the real rate" as a half percentage point higher. Then he admitted that "we're not actually the lender, but I can connect you with one who'll take your application and give you a free quote."
Mortgage promotions such as these are rampant, and federal officials say many of them are fishing expeditions designed to harvest personal application information in vast quantities and sell it to lenders. Those lenders often will not be able to deliver anything close to the rates originally advertised.
The Federal Trade Commission, which has statutory authority to track down and move against deceptive marketing schemes, is interested in knowing more about burgeoning home mortgage scams.
Several months ago, the FTC settled a case against Florida-based 30 Minute Mortgage Inc., which was suspected of offering "3.95 30-year mortgages" and had falsely presented itself to consumers as a "national mortgage lender." Instead, the FTC said, the company was trolling for personal financial information and selling it to others.
As part of the settlement, the company and its principals admitted no wrongdoing. The FTC alleged that 30 Minute Mortgage:
Sent "millions" of spam e-mails promoting applications for 3.95 percent 30-year mortgages via its Web sites. The 3.95 percent rate turned out to be a "payment rate" available only in the first year, rather than a true interest rate. The unpaid interest due was deferred and added to the principal balance of the loan.
Misrepresented itself as a lender active nationwide. 30 Minute Mortgage was found to have virtually no physical existence, operating out of Box No. 195 at Mail Boxes Etc. in Boca Raton, Fla. It was found not to be licensed or registered to do business as a lender in any state.
Misled consumers about its data security measures for mortgage loan applicants. The company advertised that it would encrypt personal data, but an FTC investigation found no such security protections activated on the company's Web sites.
Collected personal data not to make mortgages but to sell "thousands of full-length completed loan applications to nonaffiliated third parties, without regard to the mortgage programs or rates that these third parties offer."
To avoid being snared by scammers' fishing nets, first of all ignore come-ons with low-sounding rates that require you to provide confidential financial information before receiving a "free quote." Avoid Web site applications with no contact information beyond an application hyperlink and no lock or key symbols of data security.
To take a more activist approach, you can report suspected scammers to the FTC. You can forward online promotions to the agency at firstname.lastname@example.org. You also can call 877-FTC-HELP or submit a complaint at the FTC home page, www.ftc.gov.
Ken Harney's e-mail address is email@example.com.