April 18, 2024
Are FHA mortgages and other types of mortgages riskier in 2024? The answer may be YES thanks to a currently elevated potential for mortgage fraud initiated by scam artists.
Fraud prevention company Funding Shield reports high fraud vulnerability in roughly half of all “portfolio loans,” including residential mortgages, in the first three months of 2024.
According to HousingWire.com, such problems seem to arise due to a “lack of appropriate controls” related to closing procedures.
In some cases, these problems are not related to a residential real estate borrower or seller, but for one specific aspect of the mortgage process, FHA mortgage loan applicants may be at an elevated risk.
Wire Fraud Scams And Your Mortgage
The Funding Shield report includes data about closing cost-related wire fraud vulnerabilities. Those potential problems were found in nearly 10% of mortgage transactions according to the study.
This information points to a higher risk for “bad actors” learning about mortgage and real estate closings” and using that information to swindle house hunters and home loan applicants out of their closing money.
This commonly happens via fake instructions allegedly sent from the bank changing the previously agreed-to procedure for making that closing day payment. Do not obey those instructions.
Protect Yourself
To protect yourself from a wire fraud scam related to mortgages, make an appointment and speak directly to your loan officer. Ask what the closing cost procedure is and how to pay.
Ask the lender for the bank’s procedures for paying your closing costs. Be sure to ask if there are any specific situations where you would be asked to deviate from that procedure.
Do NOT be talked into changing that arrangement. Some get an email, text, or phone call with instructions to do otherwise. If you receive such a communication, do not reply to it and do not obey it.
Call the bank’s central number listed on the lender’s official website, which you should navigate to manually and not via a click on a link sent to you.
This will take longer than you might like, but it is the safest way to protect your investment. Once you reach your loan officer, explain what happened and ask directly what to do.
Do Not Respond To Scammers
Did you get a phone call, social media message, text, email, or other communication requesting that you to deviate from the previously agreed-upon steps your loan officer mentioned? Don’t fall for that.
None of the contact details included in the message is trustworthy. This is so important it bears repeating. DO NOT use the contact information provided to you in the message.
Reach out to your loan officer by way of the bank’s main number, as we advised above.
If you don’t take this important step, you may end up getting scammed, having been fooled into using the compromised contact information in the communication sent by the scam artists.
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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