How to Spot & Prevent Mortgage Scams
When buying a home, the last thing you want to worry about is falling victim to a scam. Unfortunately, mortgage fraud and scams have become more common as criminals find new ways to target homebuyers. Knowing the warning signs and how to protect yourself can help ensure your homebuying journey stays safe and secure.
Common Types of Mortgage Scams
- Wire Fraud
One of the most common scams involves fraudulent emails or calls directing buyers to send their down payment or closing funds to a fake account. Once the money is sent, it’s nearly impossible to recover.
- Loan Modification Scams
Struggling homeowners are sometimes targeted by companies promising to “save” their home for an upfront fee. In reality, these scammers often disappear once they’ve been paid.
- Fake Lenders or Phishing
Scammers may pose as lenders or mortgage companies, asking for sensitive information like your Social Security number, bank account details, or login credentials.
- Too-Good-To-Be-True Offers
If a mortgage rate or program seems unrealistically low compared to the market, it may be a bait-and-switch tactic or outright fraud.
- Junk Mail and Spam
Once your mortgage is recorded as a public record, third-party companies purchase this info and send official-looking letters about refinancing, home warranties, mortgage insurance, or other “urgent” offers. They will look convincing, but most are marketing tactics or scams designed to confuse homeowners.
Red Flags to Watch Out For
- Emails or phone calls that pressure you to act immediately.
- Requests for wire transfers without verification.
- Poor grammar, misspellings, or suspicious email addresses.
- Lenders who aren’t transparent about fees, rates, or who can’t provide credentials.
How to Protect Yourself
- Always verify wire instructions directly with your lender or title company using known phone numbers.
- Work with trusted, licensed mortgage professionals who have a proven track record.
- Check credentials through the Nationwide Mortgage Licensing System (NMLS).
- Trust your instincts. If something feels off, ask questions or get a second opinion.
The Bottom Line
Buying a home is one of the biggest financial decisions of your life. By staying vigilant and working with a reputable lender, you can avoid falling victim to mortgage scams. Knowledge is your best defense against fraud.
