Protecting Yourself from Real Estate and Mortgage Scams
Real estate and mortgage scams are on the rise, with fraudsters constantly devising new ways to take advantage of unsuspecting consumers. In 2021, the Federal Bureau of Investigation’s Internet Crime Complaint Center received reports from 11,578 victims regarding incidents of real estate or rental fraud. To avoid becoming a victim, here are five common real estate and mortgage scams to keep on your radar, along with tips to protect yourself.
Escrow wire fraud scams
Escrow wire fraud happens when a scammer pretends to be from the title or escrow company and provides instructions on where to wire your escrow funds. They may even set up a fake website that appears to be from a real company. To avoid falling for this scam, verify the wiring instructions by calling the phone numbers listed in the original documents from your lender. Avoid clicking on email or text links, or sending money online without verifying wire instructions with a live person on the phone.
Loan flipping and predatory lenders
Predatory lenders engage in loan flipping by persuading homeowners to refinance their mortgage multiple times, often with increasing loan amounts. To avoid this, involve a trusted relative or friend in any key financial discussions, especially decisions related to your mortgage. Work only with known banks or lenders, and review all fees and penalties presented to you.
Scammers often target homeowners who are in preforeclosure with offers of foreclosure relief. Homeowners can avoid this scam by working directly with their loan servicer to modify their existing loan, request forbearance, or make some other arrangement. Enlist the help of a HUD-accredited housing counselor to see what options you have, then include your counselor on a three-way call with your lender to find solutions.
Fake listings and rental scams
To avoid falling for this scam, conduct a thorough background check on the person advertising the property. Avoid paying any money upfront without viewing the property or signing a lease agreement.
Identity theft is a common scam in which a fraudster steals your personal information, such as your Social Security number, and uses it to open credit card accounts or take out loans in your name. To avoid this, be wary of unsolicited emails or phone calls that ask for personal information. By being aware of these common scams and taking the necessary precautions to protect yourself, you can avoid falling victim to real estate and mortgage fraud. Remember to always verify information with trusted sources and to conduct thorough research before making any financial decisions.