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Understanding Mortgage Fraud to Better Protect Your Largest Asset

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By: Bryan Watkinson and Veronica Perez
AVP of Risk Operations and Loss Prevention Manager

April 17, 2023

The housing market continues to dominate the news cycle, with buyers and market experts alike closely watching home supply, sales data, interest rates and buyer sentiment. For those searching for their next home, navigating the sales process is challenging enough, but once you locate the gem you’ve been searching for and enter into homeownership, it opens the door to a new wave of challenges.

Whether you are securing a new mortgage or maintaining a years-old loan, fraud risks remain high for borrowers. Most often mortgage fraud refers to fraud committed during the application process, but there are also real threats that target borrowers later in the process, too. Here’s what you need to know.

Scams That Target Homeowners and Borrowers

Understanding common fraud efforts and their implications are key. Some of the common scenarios include:

  • Foreclosure Rescue and Loan Modification Scams: If you’re struggling to make mortgage payments, be wary of anyone offering a quick fix, especially if they ask for money upfront. Legitimate help is available from accredited counselors - including services available through Affinity 1. If it sounds too good to be true, it likely is.
  • Home Improvement Scams: These types of scams tend to arise following a natural disaster event, such as extreme weather or fire. Scammers offer to fast-track repairs and encourage victims to take out a home equity loan. Always check credentials and references, and never pay the full amount upfront.
  • Reverse Mortgage Scams: Homeowners, be alert. If someone is pushing you towards a reverse mortgage, step back and seek advice. These financial products are complex and can have long-term implications for your estate and retirement.
  • Rent-to-Own Scams: They dangle the dream of homeownership with terms that seem too easy. Always research the property and the owner, and have a lawyer review any agreement before you sign.

How to Protect Yourself

Knowledge is power. Research, ask questions, and never rush into financial decisions. Consult with professionals - particularly those you trust and who are familiar with your financial situation - and remember, legitimate advisors never demand immediate payment or guarantee results. If you find yourself unintentionally engaged with a scammer, take extra precautions to protect yourself and your identity. Be sure to always shred sensitive information, monitor your credit and be cautious when sharing personal details, especially online.

In most cases, your home is your largest asset. By staying informed and vigilant, you can protect yourself from scams to keep your financial life secure.

This information is for informational purposes only, is intended to provide general guidance, and does not constitute legal, tax, or financial advice. Each person's circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition.