It would be nice if we lived in a world where everyone was honest. Unfortunately, it’s not the case. Scammers are out there, and they’re willing to take advantage of anyone they can, including new or potential homeowners. Below, we’ve discussed how to identify and avoid home financing scams.
How to Spot a Mortgage Scam
It’s unfortunate that something like home financing scams still happens in today’s day and age, but alas, they’re still at large. Greedy scammers try to prey on vulnerable homeowners and trick them into giving out money or information. First-time buyers, elderly individuals, and people at risk of going into foreclosure are common targets.
In order to spot a mortgage scam, you need to know the warning signs of what to look for. If something sounds like it’s too good to be true, it probably is! Scammers often promise things like lower than market interest rates, loans for people with poor credit, and foreclosure prevention.
Common Home Financing Scams
Home financing scams come in many different forms and employ different tactics to try to trick borrowers. Some target people with low credit scores while others use more creative methods like impersonating a real estate agent with false credentials. Here are some of the most common home financing scams that people encounter today:
Mortgage Wire Fraud
If you’ve ever bought a home before, chances are your lender warned you about mortgage wire fraud. It’s common for homeowners to wire money to a bank or real estate attorney to pay closing costs. Wire fraud occurs when a scammer attempts to convince a borrower to wire money to an illegitimate account. Often, the money is sent to an untraceable, offshore account. After it has been sent, it is next to impossible to recover.
Foreclosure scams occur when a homeowner is in financial trouble and is at risk of losing their home. Scammers will promise to pay the mortgage and save the property owner from foreclosure. Various tactics are used for these types of scams, including equity skimming and loan modification schemes.
Reverse Mortgage Scams
Reverse mortgage scams target senior homeowners. These schemes attempt to take advantage of HECM (Home Equity Conversion Mortgages) that are insured by the FHA. The HECM program offers seniors their equity in a single payment. Scammers attempt to skim a portion of the payment or steal it entirely.
Learn More About Home Financing Scams
Mortgage Solutions Financial is committed to empowering our customers with information so they can make informed decisions about the homebuying process. If you have questions about home financing scams, please do not hesitate to contact our office.