We have all kinds of warning signs to keep us safe — whether a red light at an intersection or a smoke detector in our home. There are also warning signs to keep you financially safe from mortgage fraud. Over the past several years, mortgage fraud has increased. But paying heed to the following three warning signs can help you avoid falling victim to fraudulent schemes.
Warning Sign #1: New or updated instructions to pay your closing costs
You’re in the midst of a home purchase or refinance and receive an email or text from a title or escrow company outlining new wiring instructions to pay your closing costs. You’re told to click on the link in the email or text as a way to easily make your payment. Unfortunately, you follow the new instructions and the recipient is a fraudster — your money never arrives in your escrow account.
How can you protect yourself? Be wary of any email or text regarding payment change instructions. Before wiring any funds, confirm the details of the payment and vendor information by calling them at the number provided on your loan documents. After wiring funds, call your settlement services provider or real estate agent right away to make sure they receive the funds. If you suspect fraudulent activity, call the bank that’s wiring the funds immediately to see if the wire can be stopped or retracted. If the bank is Wells Fargo, contact your local Wells Fargo branch or call 1-800-869-3557. You should also report the crime to the FBI Internet Crime Complaint Center and your local police or regional FBI office.
Warning Sign #2: A request for upfront fees to “rescue” your mortgage
Life can get complicated. Some people may fall on hard times and get behind on their mortgage payments. Unfortunately, fraudsters prey on those who are desperate to save their homes. They’ll claim they can reduce a homeowner’s mortgage payments for a substantial fee that must be paid upfront. Once the fee is paid, the homeowner believes the fraudulent company is paying his or her lender a negotiated price. Instead, the company takes the money and doesn’t make the payments (or makes a few payments to keep up appearances). All the while, the homeowner is paying the fraudulent company regular monthly payments. After a few months of non-payment, the legitimate lender will likely take action against the homeowner.
How can you protect yourself? If you find yourself trying to avoid foreclosure, your best move is to contact your lender to see if there’s a way to modify your existing loan or make some other arrangement. You may also choose to reach out to a HUD-accredited housing counselor to see what options are available in your situation.
Warning Sign #3: Requiring the transfer of your property title
The title to your home (often referred to as a deed) serves as evidence that you own a home. Several mortgage scams start with a company asking you to transfer the title of your home to them. They claim they can negotiate a better mortgage payment or refinance your mortgage on your behalf if you agree to send your mortgage payment to them. They further claim that after a year or so, you can buy back your home, and because your credit has improved, you’ll get better terms on a new mortgage. It can sound enticing if you’re facing foreclosure, but in fact, it’s a trick. These fraudsters want control of your home (via the title) in order to sell it or steal your equity.
How can you protect yourself? Never transfer your property title to anyone to negotiate on your behalf. If you’ve fallen on hard financial times and have a Wells Fargo mortgage, we’ll be happy to discuss your options with you.
What else can you do?
Be wary of unsolicited contacts or high-pressure sales tactics, whether through email, over the phone, or in person. And if you’re buying a home, check the title history to ensure it hasn’t been sold often over a short period of time. Also, carefully review the appraisal.
In fact, review all your mortgage documents meticulously. If you see any blank fields where you would expect information to be pre-filled (such as the date), don’t sign the document. If you don’t understand what something means, ask for clarification. If you’re still unclear, don’t sign the document.
Above all, if something sounds too good to be true, it probably is. Anytime you’re promised a substantial profit with a small amount of effort or time, consider it a warning sign and look elsewhere. Contact only those you trust to help you with your mortgage. For example, if you have a Wells Fargo mortgage, a Home Mortgage Consultant is ready to help answer any questions you may have.
If you suspect you’re a target of mortgage fraud, report the activity to your lender and local law enforcement. You should also report any mortgage fraud you experience to the FTC. To do so, visit the FTC’s complaint website, click on the FTC Complaint Assistant icon, and answer the questions presented.