When you buy a home in Albuquerque, the last thing you need to worry about is being scammed. Yet, mortgage scams are an unfortunate reality that has victimized thousands of people. Over 11,000 people reported being scammed when financing a home in 2018 alone. And to make matters worse, scammers are getting more and more creative about how they steal your money. Scammers are also notoriously hard to catch, as many operate outside the country.
Here are two of the main ways that scammers have stolen money from home buyers and how you can protect yourself.
Escrow Wire Fraud
How it happens: Someone sends you an email claiming to be from your title or escrow company. The email contains instructions on where to wire funds. There will usually be a fake website that looks like the real website of your title or lending company. The scammers will use other tactics to deceive you, such as making phone numbers, websites and email addresses appear familiar, but one number or letter is off, which is an easy thing to miss at first glance.
You then follow the instructions and wire the money. Except in this case, the money goes to an offshore account, and the scammers have your money. At this point, there is almost nothing that can be done to get it back, since it's not on American soil.
How to protect yourself: Protecting yourself is simple. If you get any email with instructions on wiring money, ALWAYS call your real estate agent. Never click on email or text links, or send money online, without verifying wire instructions with a live person on the phone from a number that you’ve called and verified.
Also beware of any email or text that requests a change to wiring instructions you already were given. Always confirm the escrow account number before wiring money, and call your settlement agent to verify the transfer of the funds immediately after you’re done.
How it happens: Loan flipping is when a predatory lender persuades a homeowner to refinance their mortgage repeatedly, often borrowing more money each time. The scammer charges high fees and points with each transaction, and homeowners get stuck with higher loan payments they can’t afford after being duped into borrowing most of their home’s equity.
Seniors with memory impairment are especially vulnerable to these scams because they have significant home equity and may not realize they’re being taken advantage of. Predatory lenders convince homeowners they can help them find a better loan product or use a cash-out refinance to pay for home renovations to make their homes more accessible as they age in place.
How to protect yourself: Elderly homeowners in Albuquerque who have cognitive issues should involve a trusted relative or friend in any key financial discussion, especially about tapping home equity. If you’ve recently completed mortgage refinance, it’s usually not in your best interest to do another transaction right away.
If predatory lenders are actively seeking you out and you haven’t requested their help, that’s another warning sign that something is off. Work only with known banks or lenders, and question all fees and penalties presented to you. Lenders are required to provide loan estimates and closing disclosures that list all fees and third-party costs, so make sure to review these documents carefully, or have a trusted adviser do this.