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How to Protect Yourself From Mortgage Scams

Updated: Nov 23, 2021



Every year, real estate scams — such as wire fraud and other mortgage fraud — lead to millions of dollars in losses to families. For instance, consumers make more than 11,000 reports annually to the Federal Trade Commission (FTC) of debt management scams, such as mortgage foreclosure relief fraud. In a report that combines rental and real estate crimes, the FBI revealed that there were $213 million in total damages to 13,000 US citizens because of real estate web fraud in 2020.


5 federal tips to prevent mortgage fraud


Here are tips from the US Department of Justice on how to protect yourself from mortgage scams:

  1. Mortgage rescue firms can be incredibly deceptive, per the DOJ: the ways they communicate – including logos, seals, and names – are often efforts to be perceived as government programs. These fraudulent organizations want the recipient to think they will not be responsible for a loan but are instead receiving federal benefits to help pay off the home. Commonly these scammers make specific guarantees.

  2. You put your home and financial future at risk if you ever cease making payments on your mortgage, make the payments to an entity that is not your lender, or transfer your property’s title.

  3. Advertisements for fraudulent mortgage programs will make impossible promises, so be careful with any organizations that make lofty claims.

  4. Watch out for advance fees or monthly fees required by any loan modification service. Typically these fees are illegal, according to the DOJ.

  5. Some scams are multi-step, starting with a reverse mortgage. If a broker wants you to purchase investments such as annuities or long-term care insurance by first landing a mortgage loan, that is a red flag.


How to avoid mortgage phishing scams


One common digital mortgage scam is phishing, through which homeowners receive spoofed emails from scammers that seem to be legitimate companies asking for closing funds. To protect yourself in advance, get the names and phone numbers of two trusted individuals, such as your realtor and mortgage broker, per the Consumer Financial Protection Bureau (CFPB). Speak with those individuals and follow their phone instructions — rather than any instructions within an email — before wiring money.


Working with a trusted advisor


Since your home is such a critical investment, it is important to work with trusted advisors to ensure your property and finances are protected. At Best Advantage Mortgage, we have a 5.0 Google rating (based on 51 reviews). Meet our team of community-trusted mortgage advisors.

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