Beware of Mortgage Scams: Protect Your Home and Finances
March Scam of the Month
Homeownership is one of the biggest financial decisions you’ll ever make. Unfortunately, the process of securing a mortgage or refinancing can also open the door to fraudsters looking to exploit vulnerable individuals. Mortgage scams come in many forms and often target people who may not fully understand the intricacies of real estate or financial systems. These scams can lead to financial devastation and steal away your dreams of homeownership.
Common Mortgage Scams to Watch Out For
1. Fraudulent Mortgage Letters
Scammers often send letters that appear to be from your mortgage lender or financial institution. These letters may urge you to take immediate action and include your Mortgage ID number, which is publicly available. The goal is to make the letter seem trustworthy, pushing you to call without fully understanding the issue. Always verify any communication before acting by contacting your lender directly. Never use the contact information provided in an unexpected letter.
2. Reverse Mortgages
Targeting elderly homeowners, these scams involve aggressive tactics to convince seniors to take out a reverse mortgage. This type of loan allows homeowners to convert part of their home equity into cash, but scammers often promise unrealistic returns or fail to disclose the risks involved. In some cases, they may attempt to steal home equity or manipulate homeowners into signing over ownership.
3. Mortgage Warranties
Fraudsters offer home warranties that promise to cover the cost of repairs for major systems and appliances. They may charge high fees upfront but fail to provide the coverage they claim. Often, these scammers use high-pressure tactics such as telemarketing or door-to-door sales to push homeowners into buying unnecessary or overpriced warranties.
4. Mortgage Refinancing
Homeowners looking to lower their mortgage payments or secure a better interest rate are often targeted by scammers offering "no-cost" refinancing or guaranteed approval—regardless of credit history. These scammers may charge hidden fees, inflate the loan amount, or falsify documents. In the end, homeowners may end up with higher payments and more debt.
5. Mortgage Foreclosures
When homeowners are struggling to make mortgage payments and are facing foreclosure, scammers offer help by promising to negotiate with lenders or provide refinancing. They often charge high upfront fees and fail to deliver. In some cases, they trick homeowners into signing over the deed to their property, leaving them without their home.
Learn from Former Fraudster Matthew Cox
Matthew Cox, a former fraudster who was once one of the FBI's most wanted criminals, orchestrated a $55 million bank fraud scheme. After serving 13 years in federal prison, Cox dedicated his life to raising awareness about financial scams. He now educates the public through his YouTube channel and media appearances to help others avoid falling victim to fraudulent schemes.
Helpful Tip
Before engaging with any company, use the Better Business Bureau (BBB) Search tool to verify their rating and ensure they are legitimate. You can also contact your local BBB office to confirm the business’s credentials.
Where To Report?
If you suspect you’ve been a victim of this type of scam, it’s essential to act quickly. Here are some steps to follow:
Report to the Federal Trade Commission (FTC) online or call 1-877-438-4338.
Use the FBI Internet Crime Complaint Center to file a complaint.