Mortgage scams vary by country, but many follow the same patterns worldwide. Here are the most common ones:
- Foreclosure Rescue Scam
- Fraudsters target homeowners struggling to make mortgage payments.
- They promise to stop foreclosure for an upfront fee but provide little or no help.
- In some cases, they convince homeowners to sign over ownership of their property.
- Loan Modification Scam
- Scammers claim they can negotiate better mortgage terms with the lender.
- They often demand large advance fees and then disappear or do nothing.
- Fake Mortgage Lender Scam
- Criminals pose as legitimate lenders offering unusually low interest rates or guaranteed approval.
- They collect application fees, deposits, or personal information without providing a real loan.
- Wire Transfer Fraud
- Buyers receive fake emails pretending to be from their lawyer, bank, or title company.
- The email instructs them to wire the down payment to a fraudulent bank account.
- Identity Theft Mortgage Scam
- Criminals steal someone’s identity to obtain a mortgage or refinance a property.
- Victims may not discover the fraud until they receive debt collection notices.
- Property Title Fraud
- A fraudster forges documents to transfer ownership of a property into their name.
- They may then sell the property or take out loans against it.
- Equity Stripping
- Scammers persuade homeowners to borrow against their home’s equity.
- They arrange loans with excessive fees or impossible repayment terms, eventually causing foreclosure.
- Occupancy Fraud
- A borrower falsely claims they will live in a property to qualify for lower interest rates reserved for owner-occupied homes.
- Income and Employment Fraud
- Applicants exaggerate or fabricate income, employment, or assets to qualify for a mortgage.
- Sometimes dishonest brokers encourage borrowers to provide false information.
- Appraisal Fraud
- A property’s value is intentionally overstated or understated.
- This can benefit dishonest buyers, sellers, lenders, or investors.
- Straw Buyer Scam
- Someone with good credit purchases a property on behalf of another person who could not qualify.
- The real borrower often has no intention of making payments.
- Mortgage Payment Diversion
- Criminals trick homeowners into sending mortgage payments to fake servicing companies or fraudulent accounts.
- Refinancing Scam
- Homeowners are pressured into repeatedly refinancing their mortgage.
- Each refinance generates high fees, reducing the homeowner’s equity.
- Home Equity Loan Scam
- Fraudsters convince homeowners to take out unnecessary loans secured by their homes.
- They charge excessive fees or steal the loan proceeds.
- Phishing and Fake Customer Support
- Scammers impersonate banks or mortgage servicers through emails, text messages, phone calls, or fake websites.
- Their goal is to steal login credentials, banking details, or one-time security codes.
Common warning signs
- Requests for upfront fees before services are provided.
- Guarantees of loan approval regardless of your financial situation.
- Pressure to act immediately or keep the transaction secret.
- Requests to wire money or pay using gift cards or cryptocurrency.
- Advice to falsify information on a mortgage application.
- Unsolicited offers claiming to “save your home” or “erase your mortgage.”
- Emails requesting last-minute changes to payment instructions.
- Documents with blank spaces or requests to sign incomplete forms.
How to protect yourself
- Verify the identity of lenders, brokers, lawyers, and mortgage servicers independently.
- Never send money based solely on emailed wiring instructions; confirm them by phone using a trusted number.
- Read every document before signing and never sign blank forms.
- Be skeptical of guarantees that seem too good to be true.
- Monitor your credit reports and property records for unauthorized activity.
- Report suspected fraud promptly to your lender and the appropriate law enforcement or financial regulator in your country.
While the specific laws differ from country to country, these schemes are among the most frequently reported mortgage scams across North America, Europe, Asia, Australia, Africa, and many other regions.
