Mortgage Scams: How You Can Protect Your Clients from Fraud

Estimated Reading Time: 6 Minutes

As a mortgage broker, lender, or realtor, your business is built on trust and the reputation you’ve built by guiding people through one of the most significant purchases of their life. That’s why it’s critical to keep your clients informed of the risks that come with buying property, including potential market fluctuations, unexpected repairs, scams, and identity theft.

As uncovered in our inaugural Identity & Cybersecurity Concerns Survey, 3 in 10 consumers believe buying and/or selling a home makes them most vulnerable to identity theft.

This isn’t surprising, given that consumers lost over $145 million to real estate fraud in just one year.

Don’t let a fraudster looking to make a quick buck (or big bucks in this case) scam your homebuyers.

Let’s explore a few common mortgage scams, how your clients can spot them, and what you can do to help protect your clients and foster trust in your business with proactive measures and tools.

Key Takeaways

Education about mortgage scams and how to spot them is key. There are tools you can provide your clients to help them protect their identity and most valuable assets.

Homebuyers and homeowners should always verify offers before providing personal and financial information.

If a homebuyer or homeowner becomes a victim of mortgage fraud or scams, they should report it to the Federal Trade Commission (FTC).
You can offer proactive protection by providing clients comprehensive property fraud and data protection as part of your fees or house-warming gift. Iris’ comprehensive protection package combines key products and services for homebuyers in one place, helping to protect them against home title theft, scams, cyberattacks, and identity fraud.
If you're looking for a standalone protection solution, you can offer any of the solutions included in Iris' bundle separately.

What are Mortgage Scams?

Buying and/or selling property can sometimes be complicated. That’s why individuals in the home buying or selling process are attractive targets for scammers. Fraudsters pose as mortgage lenders, brokers, real estate agents, or even mortgage relief service providers to gather information from homebuyers and gain access to their financial accounts. And with the rise in Artificial Intelligence (AI), these crimes are only becoming more sophisticated and persistent.

In fact, Mortgage Foreclosure Relief and Debt Management was listed in the top 10 fraud types reported to the FTC. It was also one of the categories with the highest median individual losses ($1,500).

Three Common Types of Mortgage Scams

As an expert in the real estate industry, you know how to spot mortgage scams better than most because of your experience and knowledge of the process. To help your clients avoid scams, education is key.

Here are three common scams you can share with your clients to help them protect themselves during the property buying/selling process.

Mortgage Relief Scams. Scammers target worried homeowners seeking to avoid foreclosure on their home. These fraudsters, posing as legitimate companies, advertise that they can change the homeowner’s loan to help them keep their property – for a “small” upfront fee before rendering any services. They may also want the individual to pay via a gift card or wire transfer. Scammers like this payment method because it’s harder to recoup the lost funds.

Demands for upfront payments before these types of services are rendered is illegal and a red flag to cease communications with a potential fraudster.
Reverse Mortgage Scams. These scams target older homeowners who are eligible for reverse mortgages. Scammers may pose as legitimate organizations using phishing tactics, tricking the homeowner into signing loan documents or a deed transfer under the guise of executing a reverse mortgage.

Fraudsters may also use these scams to further their investment schemes, fraudulently advising seniors to take out a reverse mortgage to invest in bogus schemes, like fake retirement plans or real estate deals. The promised “access to big bucks” ends up being for the fraudster, not the homeowner.
AI Mortgage Scams. AI is everywhere, and fraudsters use it to scam people in every industry. In the mortgage lending and real estate industry, scammers use AI to generate spoofing calls, fake listings, emails, and other communication mechanisms to phish for information and big bucks from individuals.

These advertisements or messages are hyper-realistic, but something appears slightly off. They may even include links to fraudulent websites where the unsuspecting victim is tricked into entering their personal or financial information.

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63% of consumers are concerned about their home’s title/deed being stolen. 43% are extremely or very concerned.¹

How Can Homebuyers Spot Mortgage Scams?

You can help your clients spot mortgage scams by telling them to walk away if:

The offer looks too good to be true
The lender doesn’t review their finances but demands large sums of money
The closing costs are too high
The loan documents they are asked to sign are unfilled with lender/seller info
There are numerous typos or discrepancies in the documents
Large fees are demanded upfront before anything is signed or the homeowner receives any services (this is illegal in many states)
Threats are made to report them to “authorities” if they don’t adhere to the demands
Demands are made to transfer the deed of their property to a third party as part of the loan modification or mortgage relief process

How Can You Protect Homebuyers from Mortgage Scams?

Your clients rely on you for guidance and advice about their property and the home buying and selling process. By offering them educational resources and tools to help them mitigate their risk, you can strengthen client relationships while promoting a safer mortgage and real estate industry for all.
You can help protect homebuyers by:

Encouraging them to check a lender’s credentials, consumer reviews, and reputation with the Better Business Bureau.
Suggesting they verify information with a Housing and Urban Development (HUD)-certified loan counselor.
Including reminders and tips about spotting scams in all your communications with clients and potential clients. Through Iris’ Accelerate Program, Iris partners are assigned a Partner Marketing Manager, who will provide strategic collaboration for maximum education and awareness for your program and tips like these.
Embedding or offering comprehensive property fraud and data protection as part of your fees or house-warming gift. Iris’ comprehensive protection package – curated specifically for businesses like yours – combines key products and services for homebuyers in one place, helping to protect them against home title theft, scams, cyberattacks, and identity fraud.
If you’re looking for a standalone protection solution, you can offer any of the solutions included in Iris’ bundle separately, including:

Contact us today to explore how you can help protect your homeowners and potential clients from scams and fraud.

Let's Get Started

1. Iris Powered by Generali, Identity & Cybersecurity Concerns Survey, 2025

*Iris^® Powered by Generali is not responsible or liable for the availability, safety, accuracy, or effectiveness of the techniques, products, tools, or resources used by Iris Powered by Generali in its ScamAssist^® service and customers’ access and use of ScamAssist is entirely at their own risk.

**Identity Fraud - Expense Reimbursement, Cash Recovery Aggregate, and Investment & HSA Cash Recovery benefits are underwritten and administered by American Bankers Insurance Company of Florida, an Assurant^® company, under group or blanket policies issued to Iris^® Powered by Generali for the benefit of its Members. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions. Review the Summary of Benefits at https://www.irisidentityprotection.com/terms-conditions.