There are, unfortunately, many kinds of fraud and scams out there. So how can you protect yourself during the home-buying process?
One kind of fraud specific to home-buying is Mortgage Fraud.
What is Mortgage Fraud? Fannie Mae explains it as a material misstatement, misrepresentation, or omission relied upon to fund or purchase – or not to fund or purchase – a mortgage, including a mortgage associated with a mortgage-backed security or similar financial instrument.
In other words, when the information used to determine your mortgage is intentionally wrong, changing what your mortgage looks like, or denying you the ability to buy.
Mortgage Fraud
Mortgage fraud has a few key signs to look out for:
- The company/person asks for a fee in advance of their work.
- The company/person gives you a guarantee they can stop a foreclosure or modify your loan.
- The company/person tells you to stop paying your mortgage and pay them instead.
- The company/person pressures you to sign on the deed’s dotted line before you can read or fully understand what it says.
- A company/person other than your current mortgage company claims to have “government approved” or “official government” modifications for your loan.
- The company/person you don’t know asks for your personal financial information online or on the phone.
If you believe you’ve been contacted by a fraudster or have been a victim of fraud, call 1-888-995‐HOPE (4673) to report it immediately.
Housing Fraud Scams
- “Call Spoofing”: number appears in your caller ID to be a different number to disguise who is calling and get your personal information.
- Foreclosure Rescue Fraud: someone making empty promises to save your home from foreclosure.
- Title Scams: someone will offer a reduced loan payment or cash for allowing them to take over your mortgage or title with promises to let you buy your home back later. But, once they have the deed transferred, there is no guarantee.
- Post-Disaster Insurance Scams: someone offers money now in exchange for money your insurance company will give you later, often leaving you with a lot less than you would have received from your insurance company, and less money to cover expenses and repairs.
Scams change and get more sophisticated consistently, so it’s important to be up to date on what scams might be prevalent in your area or in recent weeks. If you’re ever in doubt if something is a scam, ask for specifics and do some digging. Talk to your mortgage provider, lender, or your agent if you can before you give any personal information to someone you don’t know, or to someone who contacted you unsolicited.
Read more about scams and mortgage fraud with these two resources: Avoiding Fraud (freddiemac.com) and Mortgage Fraud Prevention | Fannie Mae
