Latest news with #RoseKrieger
Yahoo
29-05-2025
- Business
- Yahoo
How to protect yourself from HELOC fraud
HELOC fraud is defined as someone stealing funds from an existing home equity line of credit or opening a new HELOC account in a homeowner's name for the purpose of withdrawing funds from it. Common scams include account takeovers, identity fraud, title fraud, and even the creation of counterfeit HELOC checks — all typically carried out via phishing or stolen data. Warning signs of HELOC fraud include unfamiliar transactions, missing statements or sudden increases in your HELOC balance or minimum payments. You can protect yourself from fraud by monitoring your account, setting up account alerts, and reporting any suspicious activity or draws promptly. Home equity lines of credit (HELOCs) are a common way for homeowners to borrow against the equity in their homes. But while HELOCs offer flexibility and relatively low interest rates for homeowners, they're also becoming a lucrative target for thieves. The reason? A HELOC can offer hundreds of thousands of dollars, borrowed against the equity that homeowners have accumulated in their property. And they have considerable stakes to draw from these days: In fact, according to a recent Intercontinental Exchange (ICE) 'Mortgage Monitor Report,' the average mortgage-holding homeowner currently has about $203,000 worth of tappable home equity. The size of HELOC credit lines and balances has grown steadily over the past year, too. With the rise of mobile banking and online document storage, the risk of HELOC malfeasance has also increased. But by understanding how it happens, and the precautions you should be taking, you'll be one step ahead of the game in protecting your home from one of the newest trends in financial fraud. HELOC fraud occurs when someone gains access to a homeowner's line of credit, either by stealing funds from an existing HELOC or by impersonating the homeowner to open a new HELOC. 'Identity theft is one way we have seen HELOC fraud committed, where a person obtains information about a homeowner through nefarious means, and then forges documents to obtain a loan in the homeowner's name,' says Rose Krieger, senior home loan specialist at Churchill Mortgage. Unlike other forms of identity theft, someone stealing from your HELOC can easily fly under the radar, because of the nature in which the money is typically borrowed: slowly over many weeks or months, rather than all at once. People often make only occasional draws from their HELOC, so they don't monitor the account frequently. Since draws also tend to be sizable, it's unlikely that a lender would flag an unusually large one, as it might do with a credit card. And since HELOC interest rates regularly fluctuate, an increase in a minimum monthly payment (caused by the fraudster's draw) might not seem out of the ordinary. In other cases, scammers may use forged documents or stolen info to open a HELOC in someone's name, cash out quickly, and disappear before either the lender or borrower realizes what's happened. It's unfortunate, but many details about a home, the homeowner and liens on a home (like a mortgage or home equity loan) are a matter of public record. HELOC fraud can take several forms. The most common methods include: 1. Account takeover fraud: Someone gains access to a homeowner's existing HELOC account through phishing e-mails or texts, data breaches, or stolen credentials (like your HELOC checks or debit cards). Once inside, they can transfer funds, change contact info, or request checks and wire transfers, all without the homeowner's knowledge. 2. Synthetic identity fraud: Scammers can use a combination of real and fake information to create a new identity and apply for a HELOC in a homeowner's name. This often involves using stolen Social Security numbers and fabricated documents to trick lenders. Last fall, several people in Orange County, Calif. were arrested and charged with stealing homeowners' identities to obtain over $500,000 in HELOC funds – money secured by the identity-theft victims' actual homes. 3. Title fraud: In more rare and sophisticated cases, a scammer may forge documents to transfer the title of your home into their name, then take out a HELOC as if they were the owner (which, on paper, they now are). While less common, this type of fraud can be more difficult to resolve. 4. Counterfeit HELOC checks: Another growing trend involves scammers creating fake checks tied to legitimate HELOC accounts. They do this by using information available in public records – like the homeowner's name, address, HELOC lender and HELOC account number – to forge convincing-looking checks, which they then use to draw on the line of credit. HELOC fraud can be difficult to detect, but there are some red flags homeowners should watch for. If you notice any of the following, it could be a sign someone has hacked your existing HELOC and is attempting to withdraw funds, or has tried to open one in your name: Unrecognized draws or transactions on your HELOC account Statements or notifications you don't recognize Missing statements or sudden changes to contact preferences (including mailing or email address) A sudden drop in your credit score A sudden increase in your outstanding HELOC balance/monthly minimum payment Lender notices regarding a HELOC account you didn't open If you believe that your existing HELOC has been compromised or that a HELOC has been opened in your name, acting quickly is your best line of defense. Here's what to do: 1. Contact your lender immediatelyNotify your bank or HELOC lender as soon as you notice suspicious activity. Review the activity with them and ask to have your account frozen or suspended to prevent further withdrawals. 2. File a police reportReport the fraud to your local police department. A police report can help support your case when dealing with the lender, credit bureaus or county clerk offices later on. 3. Report identity theft to the FTCGo to to file a complaint with the Federal Trade Commission. The FTC provides a recovery plan and documentation to help you dispute any fraudulent accounts created in your name. 4. Contact credit bureausNotify all three credit bureaus and place a fraud alert or credit freeze on your accounts. This will help prevent any additional fraudulent accounts from being opened in your name. 5. Check your property titleIf you suspect title fraud or deed theft, check your county recorder's office to verify the property title is still in your name. If it's been changed, you may need to involve a real estate attorney to resolve the issue. 6. Work with your lenderDepending on the nature of the fraud and how quickly it was reported, your lender may be able to recover some or all of your stolen funds. You should be prepared to provide documentation like a police report to support your claim. One bit of good news: You're not on the hook to repay the missing money, or any interest on it. As open-ended lines of credit, HELOCs are covered by the Fair Credit Billing Act of 1974 (part of the Truth in Lending Act), which limits your liability for fraudulent charges. But you must report them promptly. First of all, keep in a safe place any account-related paperwork and borrowing tools, like checks or cards (some lenders, like PNC, issue both). These tools make it more convenient for you to access your HELOC funds, but unfortunately make it easier for fraudsters, too. In addition to monitoring your account and using tools like credit freezes and two-factor authentication, it's essential to be cautious about unsolicited communication. Scammers often impersonate lenders by sending emails, texts, or even initiating phone calls that seem legitimate. 'To protect yourself, it's important to regularly check your credit report to ensure all debts are accurate,' says Krieger. 'Be mindful of calls and text messages claiming to be [from] your financial institution — remember that your financial institution will never call you and ask for your full Social Security number, account number or codes sent to your phone.' These messages may claim there's an issue with your HELOC account or ask you to verify personal information using a link or a passcode. If you receive an unexpected request (even one that looks like it's from your bank), don't respond right away – directly to that message, at least. 'When in doubt, hang up and call your financial institution, or go in personally,' Krieger advises. Also, check your account on the lender's website or its app yourself; if a message is legitimate, it may appear when you log in. HELOC fraud is a real and growing concern. While there are legal safeguards and lenders have security measures in place, protecting yyour home equity and HELOC funds in today's day and age ultimately starts with you. It requires a healthy dose of vigilance — and skepticism. Keep in mind that lenders will never ask you to confirm your identity by clicking a link in a text or providing personal information via an unsecured channel. By monitoring your account and statements, keeping checks and cards secure, and staying alert, you can reduce your risk and keep your home equity funds safe. And if fraud does happen, acting quickly can help you limit the damage and ensure you're able to fully recover your account and any stolen funds.
CBS News
17-03-2025
- Business
- CBS News
Why are HELOC rates so much lower than home equity loans now? Experts weigh in
Home equity line of credit (HELOC) rates have dropped considerably over the past few months, hitting two-year lows this year. Today's average rate of 8.04% marks a nearly two-percentage-point decline since September 2024 when rates sat near 10.00%. HELOC rates have fallen below home equity loans , too. As of today, the average HELOC rate is around 0.4 to 0.5 percentage points lower than the average 10- and 15-year home equity loan rates. So, for homeowners who want to tap into their equity — $313,000, on average , according to a recent survey — HELOCs provide an affordable solution. But it's not just their current affordability that makes HELOCs a good choice for homeowners with equity; flexibility is a key feature, too. HELOCs allow borrowers to draw from their line of credit as needed (up to their limit) rather than getting the entire amount upfront like a home equity loan. HELOCs give borrowers several advantages over home equity loans, in general, but it's their low rates compared to home equity loans that make HELOCs an especially appealing option right now. Why is it that HELOC rates have fallen so far below home equity loan rates? We talked with experts to find out the answer. See how much of your home equity you could borrow with a HELOC here . To better understand why HELOC rates are lower than home equity loans , it helps to know how HELOC rates work compared to home equity loans . Home equity loans use a fixed rate that stays the same throughout the life of your loan. HELOCs use a variable rate . That means that your lender adjusts your rate ( typically monthly ) based on several factors, including any changes to the Federal Reserve's benchmark rate and the lender's prime rate. With that in mind, one reason that HELOC rates are as low as they are is that Fed rate cuts at the end of 2024 trickled down to the prime rate that lenders use to calibrate their HELOC rates. "The market determines rates, and short-term mortgages (HELOCs) tend to offer better rates," says Rose Krieger, a senior home loan specialist at mortgage lender Churchill Mortgage. "HELOC rates are based on the prime rate, so because that has fallen in recent months, so too have rates on HELOCs." The prime and Fed rates are just two drivers of HELOC rates, though. Other factors , such as the state of the economy, impact HELOC rates, too. If lenders aren't sure about where the economy is headed, shorter-term lending options like HELOCs may get lower rates, says Sebastian Frey, a broker associate at real estate firm Compass Silicon Valley. "I would have to say the HELOCs are shorter-term than the HELOANs," Frey notes. And, Frey says, "shorter-term debt is more in demand right now rather than longer-term debt." With several factors pushing down HELOC rates past home equity rates and the average home equity level above $310,000, now is a good time to act. See how low your HELOC rate could be here . HELOC rates are as low as they are right now due to multiple factors, including Fed rate cuts at the end of 2024. Those cuts impacted (along with other factors) HELOCs and home equity loans, bringing HELOC rates down near 8.00%. If you're ready to tap into your home equity through a HELOC because of their low rates but are curious about home equity loans, Frey suggests comparing fees and considering a HELOC's flexibility as you make your decision. "I would … look at the fees between the loans and see what the difference in fees are," he says. "Generally speaking, I would recommend a HELOC because you can draw down incrementally rather than in one big sum."
CBS News
27-01-2025
- Business
- CBS News
Can you refinance a home equity loan into a HELOC?
With credit card rates soaring and many consumers struggling due to lingering high inflation and the rising costs of various goods and services, many homeowners have turned to tapping their home equity for cash in recent years. In fact, about 234,000 home equity lines of credit (HELOCs) were originated in the first quarter of 2024, according to TransUnion. Around 237,000 home equity loans were issued for the same period. While both moves are smart and can save you money compared to other borrowing products, HELOCs currently have slightly lower interest rates than home equity loans. So, consumers in the latter cohort (those who took out home equity loans) might have a case for refinancing. Do you have a home equity loan and are thinking about refinancing to a lower-rate HELOC? Are you even allowed to by the lender? Below, we'll detail what you need to know. Start by seeing what HELOC interest rate you'd be eligible for here. Can you refinance a home equity loan into a HELOC? Refinancing is basically starting fresh. You'll swap a current loan with a new one — one with new terms, a new loan amount, a new interest rate and new payments. You can even change the lender if you like, too. "Yes, you can refinance a home equity loan just like any other loan," says John Aguirre, mortgage broker at Loantown. "You can refinance it into another home equity loan, a HELOC, or consolidate it into a first mortgage." How to refinance a home equity loan into a HELOC You have two options if you want to turn your home equity loan into a HELOC. First, you can apply for a HELOC, and then use the funds from that loan to pay off your home equity loan balance, which essentially rolls it into your new HELOC balance. "You could also refinance your first mortgage to absorb the home equity loan, and then add on the HELOC after the fact," says Rose Krieger, senior home loan specialist at Churchill Mortgage. In either case, you'll need to shop around and compare lenders (and rates), fill out your lender's application, and submit the required financial documentation. A credit check and appraisal of your home's value are typically required, too. "The process of refinancing a home equity loan into a HELOC isn't overly challenging," Krieger says. "You just need to work with a loan officer and provide loan documentation, such as pay stubs, W-2s, tax returns, bank statements, and current mortgage statements." Be prepared, though: The requirements for a HELOC can be strict. Aguirre says you will usually need at least 10 to 20% equity in your home and a debt-to-income ratio of 50% or less. As for credit score, he says, "Qualifications are going to vary per institution, but a good rule of thumb is that the lenders will require a 640 or higher FICO score." Learn more about your HELOC options online today. When should you refinance a home equity loan into a HELOC? Refinancing your home equity loan into a HELOC can be a smart move if you know you can secure a lower interest rate than what you're currently paying on the home equity loan. If you have other debts — like credit cards or personal loans — that have higher interest rates, it's smart, too, as you can use the HELOC funds to pay those off and save on long-term interest. "HELOCs typically provide lower rates than that of a credit card or personal loan, so this can be an effective move to better manage your debt," Krieger says. You might also want to refinance into a HELOC if you need continued access to cash. With home equity loans, you receive a single payment and that's that. HELOCs, on the other hand, allow you to withdraw funds over 10 years in most cases. This can be helpful if you're doing an extended renovation of your house or you want a financial safety net just in case. Just be aware: Home equity loans are usually fixed-rate products, while HELOCs have variable rates. This can mean your rate and payment could rise over time. HELOC rates change each month. As Aguirre cautions, "Be wary of refinancing out of a fixed rate HELOAN into a HELOC solely for a lower teaser rate, as this could expose you to higher interest rates later on." There are also closing costs to consider, so make sure you factor those in before applying for your refinance as well. The bottom line Whatever you do, make sure you prepare before refinancing any of your mortgage loans. Get your financial documentation in order, and pull your credit report to make sure there are no errors or accounts in collections. You can also work on improving your credit score, as this will reduce the interest rate you're able to get. Finally, shop around and compare several lenders. Institutions can vary widely on the products, rates, and fees they offer, so shopping around can ensure you get the best possible deal on your HELOC. .
