Mortgage Fraud

How It Works

Mortgage fraud target individuals looking for home loans or financial assistance. Fraudsters may offer misleading or deceptive loan terms, demand upfront fees, or promise help with a foreclosure in exchange for payment, but they never deliver on these promises to help.

Common Methods of Mortgage Fraud

• Foreclosure rescue scams: Scammers charge upfront fees with false promises to save the home from foreclosure.
• Loan modification scams: False promises to modify loans or reduce mortgage payments.
• Predatory lending: Lenders offer loans with high fees, abusive terms, or hidden charges.

Warning Signs

• Promises to modify or refinance your mortgage for an upfront fee.
• Unsolicited offers to help you avoid foreclosure or to secure a new mortgage loan at rates that seem too good to be true.
• Pressure to sign documents immediately without giving you time to read or review them.
• Requests for personal or financial information, like bank account details or Social Security numbers, in the context of obtaining a mortgage loan, without any legitimate reason.
• Incorrect details on mortgage loan applications, artificially high property appraisals, identity theft during mortgage transactions, or scams that aim to steal equity from your home.

Ways to Avoid It

• Work with trusted lenders: Only work with lenders that are accredited and registered with the government.
• Never pay upfront fees for loan modification help: Legitimate loan modification programs don’t require you to pay in advance.
• Get everything in writing: Don’t sign anything until you fully understand the terms and have had time to review the documents.
• Seek U.S. Department of Housing and Urban Development (HUD) approved counseling for information about your mortgage loan payment options: If you’re facing foreclosure, contact a HUD-approved housing counseling agency for assistance.
• Monitor your credit reports
  • Obtain free credit reports from AnnualCreditReport.com.
  • Regularly review your credit reports for any unauthorized inquiries or accounts, suspicious activities, or errors.

Ways to Report It

Taking prompt and comprehensive actions when faced with mortgage fraud can help mitigate any potential damage and ensure that the fraudsters are reported to the proper authorities.

• Report suspicious activity to relevant federal agencies and to your state and local consumer protection agencies.
  • Online: Determine which agency regulates your bank and file a complaint.
• Report to the Internet Crime Complaint Center (IC3)
  • Online: Submit a complaint to the IC3, a division of the FBI.
  • This is especially useful for internet-related crimes.
• Report the Fraud to the Federal Trade Commission (FTC)
  • Online: Visit ReportFraud.ftc.gov to file your complaint.
  • Phone: Call the FTC at 1-877-FTC-HELP (1-877-382-4357) if you prefer to file your complaint over the phone.
• Inform your mortgage lender
  • Notify your current mortgage lender or the financial institution involved in the mortgage loan transaction about the fraudulent activity.

Remember: Stay vigilant and always verify the authenticity of communications from unknown sources.