4 Tips For Avoiding Home Mortgage Scams


Don’t Let Yourself Become A Victim

It’s an unfortunate fact that the housing market is ripe with mortgage scams targeted toward homebuyers and homeowners alike. Even banks and lenders aren't safe from some of these con artists.

After all, a house is a huge investment, and those wanting to buy or keep a home are often vulnerable and more open to schemes. The potential for a huge lump sum and the easy pickings makes for a tempting combination that many scammers are eager to take advantage of. So, how can you protect yourself from falling victim to these scams? Here’s a few things you can do:

SEE ALSO: Top 3 Real Estate Scams Exposed

1. Be Aware

The first step in avoiding becoming a victim, is to know what to avoid. There are numerous types of scams that can threaten your home and financial security. Here are some common examples of what’s out there:

  • Mortgage relief/modification: Homeowners facing the threat of foreclosure are easy targets because they are usually desperate enough to believe things they would be leery of otherwise. Scammers come along with phony schemes claiming to solve their problems, and the homeowners end up losing not just their money, but often their homes as well.
  • Bait-and-switch: In order to lure more clients, lenders will present attractive loan offers with low rates or other incentives. When it comes time to sign on the dotted line, however, the lender comes back with completely different, and much less favorable, loan terms. Some borrows end up going through with the loan because they feel they’ve already invested too much into the lender or fear it’s too late to find someone else.
  • Mortgage fraud: Providing untruthful or exaggerated information on a loan application is illegal. Falsifying information in order to qualify for a larger loan amount can be seen as forgery, bank fraud, or money laundering and can land you in jail for up to 30 years.
  • House stealing: This is a combination of identity theft and mortgage fraud. Basically, con artists steal your identity and create fake IDs to forge documents and other paperwork in your name. They then use these documents to transfer the deed of your house into their own name, essentially becoming the new owners.

2. Be Skeptical

If a deal seems too good to be true, it probably is. Even if everything appears logical and legitimate, don’t trust a lender or company until you have solid proof of what they claim. Unfortunately, anyone can purchase a list of homeowners who are behind on their mortgage payments, making it easy for scammers to know who to target. So, be wary of unsolicited contacts as well as high-pressure sales techniques.

Also, don’t be tricked into believing loans demanding upfront payment; no legitimate loan program will ask to be paid before providing service. Make sure to check for hidden fees or monthly payment charges as well. And, if anyone ever advises you to stop paying your current lender, or to sign over ownership of your house to someone else, don’t believe them.

3. Be Sure

You should be absolutely confident in a company or lender before doing any kind of business with them. Always read the fine print and don’t sign anything unless you understand it. Do some online research; consult the Better Business Bureau and scam alert websites to check for any reviews or complaints. Remember, you’re not obligated to work with any company or sign a contract right away. Take your time and do the necessary research first.

4. Be Vigilant

Always be proactive in protecting yourself from becoming a victim. Never hand over any personal or financial information until you've done a full background check on the company, and get confirmation that the representative you’re in contact with actually works there.

If you receive something suspicious, like information for a loan from a mortgage company that isn't yours, don’t just toss it in the trash. Read it and make sure no one has requested anything in your name. If something doesn't seem right, call the company to find out what’s going on.

Finally, if you fall victim to any type of fraudulent scheme, make sure to report it to the authorities, like the Federal Trade Commission (FTC) or the U.S. Department of Housing and Urban Development (HUD). Not only can they help you figure out what to do next, they can also use the information to crack down on these illegal practices.

SEE ALSO: 8 Ways To Reduce Identity Theft Risk

When it comes to your home and your money, you need to keep your guard up. Before going with the easiest or cheapest solution, research your alternatives and become a conscious consumer. Obtain recommendations from people you trust, and research the company before you take any action. Yes, a strain on your finances is a stress you would want to alleviate right away, but it’s better to go with the smartest solution rather than just the fastest one.

Date of original publication:
Updated on: September 02, 2016

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