Buying a home is one of the biggest financial decisions you’ll ever make. Unfortunately, it’s also a prime target for scammers. Mortgage scams are fraudulent schemes that trick homeowners or prospective buyers into losing money, property or sensitive personal information. Scammers often target financially vulnerable people with promises that are too good to be true and pressure them into making hasty decisions.
If you’re preparing to buy or refinance a home, connect with the mortgage lending experts at Community Point Bank in Mid-Missouri. Our team will guide you through the process with trusted advice and secure practices so you can focus on achieving your homeownership goals.
The good news is that you can protect yourself. By knowing what to look out for, you can avoid falling victim to mortgage fraud and keep your dream of homeownership safe.
Common Mortgage Scams
Mortgage scams come in many forms and scammers are always finding new ways to exploit people. Here are some of the most common ones to be aware of:
- Mortgage closing/wire fraud: A scammer, often after hacking an email account, impersonates your title company, real estate agent or lender. They send fake wire transfer instructions for your closing costs or down payment. Once your money is wired, it’s nearly impossible to recover.
- Foreclosure relief or loan modification scams: Scammers target distressed homeowners with promises to negotiate with the lender or stop foreclosure. They demand an illegal upfront fee but rarely provide any help, leaving the homeowner in worse shape.
- Equity stripping: A scammer convinces a homeowner facing default to temporarily sign over their deed to an “investor.” The scammer then takes control of the home and its equity, leaving the owner without the property and still responsible for the mortgage.
- “Rescue” loans: Fraudsters present refinancing documents that seem legitimate. Hidden in the fine print is language that signs over your deed.
- Bait-and-switch: A lender advertises a low-interest rate but once you commit, the loan terms change to a higher rate with unfair conditions.
- Loan flipping: A predatory lender pushes you to refinance repeatedly. Each refinance piles on fees, drains your equity and extends your debt.
- Bogus lenders: Fake lenders set up convincing websites and offer unbelievable rates. Their real goal is to steal your personal information and money through upfront fees.
Warning Signs of a Mortgage Scam
Mortgage fraud schemes often shares some red flags. If you see any of the following, take a step back before moving forward:
- Requests for upfront payment before results
- Unsolicited offers to refinance or stop foreclosure
- High-pressure tactics that rush you into signing
- Emails or calls with poor grammar, typos or odd requests for communication
- Demands for personal or financial details over the phone
- Offers that sound too good to be true like guaranteed approval or no closing costs
- Instructions to send mortgage payments somewhere other than your loan servicer
Staying alert to these warning signs can help you avoid becoming a victim.
What To Do If You Suspect a Scam
If you believe you’ve been targeted by a mortgage scam, act quickly. The faster you respond, the better your chances of limiting damage.
- Contact your bank immediately: The earlier you contact your bank, the more help they can provide. For instance, if you’ve ordered a wire transfer but contact your bank before it is sent, they may be able to stop it.
- Report the fraud:
- Federal Trade Commission (FTC): File at ReportFraud.ftc.gov or call 1-877-382-4357
- Internet Crime Complaint Center (IC3): File at ic3.gov
- Consumer Financial Protection Bureau (CFPB): File a complaint if a mortgage company is involved
- Your lender: Notify them of suspicious activity
- Your state attorney general: Report the scam to your state’s consumer protection agency
- Federal Trade Commission (FTC): File at ReportFraud.ftc.gov or call 1-877-382-4357
- Protect yourself from identity theft: Visit IdentityTheft.gov if your personal details were compromised.
Reporting mortgage fraud not only helps protect you but also prevents scammers from targeting others.
How To Avoid Mortgage Scams
The best defense against fraud is prevention. Here are practical steps you can take:
- Verify your closing instructions: Call your real estate agent or title company using a trusted phone number, not one from an email. Confirm instructions in person or on the phone.
- Work with trusted professionals: Only partner with licensed lenders and real estate agents. HUD-certified housing counselors can help you find reliable professionals.
- Read all documents carefully: Never sign papers with blank spaces or terms you don’t understand. Ask questions or seek legal advice if something seems off.
- Monitor your credit reports: Check regularly at AnnualCreditReport.com for suspicious activity.
- Go directly to the source: If you get a call or email about your mortgage, hang up and call your lender using the number on your billing statement.
Being proactive and cautious makes you much harder to scam.
The Bottom Line
Mortgage scams are real and they can cause devastating financial losses. But by knowing the signs of mortgage fraud and taking simple steps to verify information, you can protect yourself and your home. Always trust your instincts—if something feels wrong, it probably is.
Talk to Community Point Bank Home Lending Experts
At Community Point Bank, we care about protecting our neighbors in Mid-Missouri. If you’re buying a home, refinancing or just want to learn more about staying safe from mortgage scams, our mortgage lending experts are here to help.Give us a call or stop by one of our locations today. Let’s make your homeownership journey safe and successful.