As the weather heats up, so do many housing markets across the country. Unfortunately, increased real estate activity means more opportunities for fraudsters. In fact, according to the FBI’s 2018 Internet Crime Report, real estate crimes cost Americans nearly $150 million in 2018 alone.*
Just as you protect yourself from the sun when the weather’s warm, it’s important to protect yourself from mortgage-related scams if you’re in the market for a new house this summer season.
At Homeowners Financial Group, we want to help you keep your hard-earned money safe. That’s why we asked Compliance Manager, Felecia Bowers, to tell us about some common scams she sees and what you can do to avoid them.
Wire fraud occurs when a home buyer is tricked into wiring money due at settlement to someone other than the title company. Fraudsters may promise discounts if you wire your money in advance or try to convince borrowers that their loan is going to close earlier than expected, so they need to send the money right away. Unfortunately, if you fall victim to wire fraud, there’s often no recourse.
But it can be prevented. Here’s how. If you receive wiring instructions via email, be wary. “Your closing agent is not going to send you wiring instructions through an email. They’ll call you or they’ll give you a piece of paper,” Bowers says. And if you do receive an email from the title company, here’s a trick to help you determine whether it’s legitimate. Hit “reply” to the email and look at the sender’s address. Often, it’s similar to the title agent’s but won’t match exactly, and the discrepancy is visible only when you hit “reply.” If you’re still unsure, call the title company, loan officer or realtor directly at a number you can trust to verify any instructions you receive via email.
When you apply for a mortgage, the loan officer will request documentation to verify your salary, assets and other financial information. Never send financial documents through unencrypted or unsecured email. “And all email is unsecured unless it has been encrypted,” says Bowers. Instead, ask your loan officer what secure method you can use to deliver your documents to help prevent your data from being compromised.
Title fraud occurs when a person falsifies the payoff on a property, making it look like they own it free and clear, even though they still owe money. Then they sell the property to a legitimate buyer. When the legitimate buyer starts paying their mortgage, the “seller” stops making payments on theirs, which often results in foreclosure proceedings by the “seller’s” lender.
It can take some time to sort out, but the legitimate buyer will usually be able to keep the property as long as they have title insurance. “A lot of people don’t [buy it] because they think it’s too expensive,” says Bowers. But title insurance can help protect your investment if you’re a victim of title fraud.
Loan officers who change companies before a loan closes have no legal authority to take your information with them, but it happens all the time, according to Bowers. If this happens to you, she recommends contacting the state and filing a claim against the loan officer.
Solicitations After Closing
When you settle on your new home and your loan closes, you’ll likely be inundated with letters or postcards that look like they’re coming from your lender but aren’t. The spam companies that send them go out of their way to make the pieces look legitimate by using abbreviations that are similar to your lender’s name. And they try to create a sense of urgency with messages like “Important Notice,” or “Open Immediately,” printed on the outside. Before taking any action, carefully review any mail you receive that’s related to your mortgage to ensure it’s legitimate. If you’re unsure, call your mortgage lender directly.
Whether you’re in the market for a new home, looking to refinance or are finally ready to tackle those home improvement projects you’ve been putting off, we have mortgage products for all your needs. Contact an HFG Licensed Mortgage Professional near you today to find the one that’s right for your situation.