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Most checks received by consumers in the mail are simply simulated checks which serve as a form of advertising. Recently, many mortgage companies have used this ploy for hooking prospects on refinancing schemes. In many cases, the actual assets of these "mortgage companies" are minimal and they simply write the new mortgage contract, then immediately "sell the paper" (either individually--or more often as a part of a package of mortgages--to a larger firm, keeping a small percentage of the contract as profit.)
Often, persons responding to such marketing techniques are met with high pressure fast-talking " mortgage account represents who may mislead consumers who are confused about the mortgage process and do not seek the advice of an attorney specializing in real estate and mortgage law.
In other cases, however, with some of the unsolicited low denomination checks (such as $1 or so) consumers neglect to read the fine print on these checks and by cashing them, they inadvertently become financially obligated to purchase services or goods. In other cases, the cashing of the check is even considered an authorization by the unsuspecting consumer, who later receives a club membership, goods or services--and an invoice.
We recommend that if mortgage refinancing is being considered, several quotes be obtained and that all terms are clearly understood and in writing--and that all contracts be reviewed by a competent real estate attorney. Additionally, we recommend that consumers who receive any negotiable instrument in the mail, be sure to read all the fine print to verify that by cashing the check no obligation whatsoever is created.
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