5 ways House Fraud Can Cost You Thousands – and How To Avoid Becoming a Victim

House fraud and real estate fraud are more common than you might think. According to the FBI, 9,521 people were victims of real estate cybercrimes in 2023.

“House fraud, often called real estate fraud, is when deceptive practices are used to manipulate individuals during property transactions,” explained Jamie E. Wright, founder of the Wright Law Firm. “Imagine someone forging documents to steal your home or tricking you into a bad mortgage deal — it’s that serious and sneaky.”

Here’s what you need to know about house fraud, including ways con artists try to perpetrate the fraud and how to avoid becoming a victim.

Common Types of House Fraud

Wright said the most common types of house fraud you need to watch out for include title fraud, mortgage fraud, and foreclosure rescue scams.

Title Fraud

“Title fraud happens when someone illegally transfers ownership of your property by forging documents,” Wright said. Once someone has accessed your deed and title, they can take out a home equity loan or attempt to sell your property for a profit.

Mortgage Fraud

Wright explained that mortgage fraud involves falsifying information on an application to get a loan. For example, if a buyer believes they won’t be approved for a loan with their actual information, they may make up or omit information on the application in an attempt to get approved. Mortgage fraud can also involve inflating property values. An appraiser may commit mortgage fraud alone or may work with a builder or a mortgage lender to commit the fraud.

Foreclosure Rescue Scams

“Foreclosure rescue scams prey on homeowners in distress with false promises of help, often making things worse,” Wright said. The Federal Deposit Insurance Corporation (FDIC) warns that if you’ve fallen behind on your mortgage payments, opportunistic companies may contact you, representing themselves as foreclosure services or rescue agencies. They may offer fake options like refinancing, modifying your existing mortgage, repairing your credit, or helping you buy more time to catch up. Always call your mortgage lender to see what it can do to help you instead.

Mortgage Wire Fraud

Mortgage wire fraud is when a fraudster tricks a homebuyer into sending the mortgage closing costs via wire transfer to a fake bank account. The fraudsters hack their way into the title company’s or real estate company’s files through phishing emails to gain access to a homebuyer’s information. They then contact the homebuyer, posing as a title company employee or real estate professional, with instructions for wiring the money to the fake bank account. Once the homebuyer realizes that the money didn’t go to the right place, it’s often too late to recover it.

Quitclaim Deed Fraud

Another type of house fraud, recently perpetrated on multiple victims in Detroit, is quitclaim deed fraud. Quitclaim deeds are often used legally to pass ownership from one family member to another, but they can also be used fraudulently. This type of fraud involves forging a simple legal document — aka a quitclaim deed — that transfers ownership without any (or very little) protection to the buyer. So if the title is “bad,” the buyer receives it “as is.”

Warning Signs

“Look out for warning signs, like sudden changes in property ownership, unexpected mortgage statements or odd communications from supposed lenders or buyers,” said Wright. “If something feels off, trust your gut and get professional advice right away.”

How To Avoid Being a Victim

To avoid these scams, Wright said that first, you must always do your homework. “Verify the identities of everyone involved, check property records for inconsistencies, and ensure all documents are accurate,” she said. “Working with trustworthy real estate agents, lawyers, and title companies is a must — they’re your frontline defense. If a deal seems too good to be true, it probably is. Don’t rush into signing anything without fully understanding it.”

What To Do If You’re a Victim of House Fraud

“If you do find yourself a victim of house fraud, don’t panic, but act quickly,” Wright advised. “Report it to local law enforcement and the Federal Trade Commission. Consult a real estate attorney who specializes in fraud — they’ll guide you through filing a lawsuit, recovering your money and clearing up your title. Also, notify your mortgage lender and any other relevant parties to prevent further issues. Remember, the sooner you act, the better your chances of minimizing the damage.”

Original article: https://www.nasdaq.com/articles/5-ways-house-fraud-can-cost-you-thousands-and-how-avoid-becoming-victim