February 3, 2023
There are common home loan scams that affect house hunters, even those applying for FHA home loans.
One such scam–one you might actually encounter in your home buying journey–is called escrow fraud and it can affect even the most experienced homeowner if they are caught at just the wrong moment.
Home Loan Scams Can Affect Any Type Of Mortgage
Escrow scams are not associated with FHA mortgages alone, any type of home purchased with any type of home loan could be targeted.
An important sense of any successful scam is creating a sense of urgency or emergency or a feeling that a big discount might be missed if you stop to consider the options.
The scammer wants you to be in a hurry, not thinking critically, and ready to invest money. into something that looks like a deal.
Escrow Fraud
With escrow fraud, people are fooled into thinking they are dealing with a representative for a title or escrow agency.
Victims of this scam get contacted with instructions that supposedly explain how to deposit escrow funds which are actually being directed into the scammer’s bank account. These accounts may be offshore and out of reach of local investigators.
The scammer may have set up a website that looks close to the actual title company’s site.
You may be directed to this website to enter account numbers, or you may be told how and when to deposit alternatively to working with the bogus web page.
Don’t Get Ripped Off By Escrow Fraud
Never send money without first reviewing the original paperwork you got from your lender. Further, protect yourself by calling your lender’s central number to discuss the wire transfer and make sure the account numbers are accurate.
Never send money without calling the bank’s main number–ask to be transferred to the correct department.
Borrowers should never use the contact numbers provided by the “title company” or “escrow company” you are asked to pay–instead, call your bank’s central customer service number and work from there.
Escrow fraud may involve slightly unusual things–details that don’t feel right to the borrower and seem “off”.
Your correspondence from the “title company” may be filled with spelling errors (often a dead giveaway), awkward phrasing, or the websites you are directed to may not feel like the slick, corporate official site you are used to when dealing with a financial institution.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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