New homeowners should be on the lookout for a possible scam in the mountain of paperwork that comes in the mail at loan-closing time, according to state consumer watchdogs.
An advertisement urging new homebuyers to make unnecessary "homestead declarations" is under investigation by the Utah Division of Consumer Protection.The advertisement arrives in the form of an official-looking letter and gives notices that the new homeowners has not made a homestead claim for equity protection as required by Utah law. Instructions are to complete an enclosed application form and return it with a $25 processing fee.
Not until the end of the third paragraph of an accompanying information sheet does the letter state it is an advertisement and that filing for a homestead claim is not required.
"We believe the advertising is deceptive," said Francine A. Giani, director of the state Division of Consumer Protection.
The ad has a return address of "County Recording Service, 370 South State Dept. No. 185, Salt Lake City."
Like many official government documents, the words "equal opportunity employer" are printed on the envelope's front along with a warning that interfering with letter's delivery carries penalties of up to $2,000 in fines and five years in prison.
Giani said the company is actually two people working out of Arizona who have a drop box at the Salt Lake address.
She said people are not required to file a homestead claim unless there is a judgment against them, and then it could be filed after the judgment is handed down. Even then, people can apply for a homestead claim for $10 at their county recorder's office, she said.
"Here you pay $25 and get back information on how to file a homestead claim," Giani said.
If the investigation determines the letter is fraudulent, Giani said the company will be shut down, but it would be up to Arizona prosecutors to press charges.