For many Americans, a home is the largest purchase they will make—and a major investment they hope will grow in value. Buying a house can involve substantial costs, such as inspections, closing costs and the down payment or full purchase price.

While buying a home would seem to be a relatively straightforward, financially safe and probably secure activity, there are still opportunities for inappropriate or illegal actions to occur that can make the process unnecessarily expensive or severely disrupt it, causing harm to both buyers and sellers. From deceptive mortgage conditions that monetarily disadvantage the buyer to larger scams that steal an entire down payment for a home, unethical financial services companies and sophisticated scammers are always looking for an opportunity to make or take money off of unsuspecting, eager home buyers.

During the closing of the sale, beware of a scammer posing as loan officer, settlement agent or other party to the transaction who will try to steal your money by diverting wired sale funds to their personal account

Buying a home involves the transfer of a significant amount of money, whether as a down payment or the full purchase price paid to the seller. At closing, these funds are often transferred from an escrow account held by a financial services provider. Because such large sums are involved, scammers may attempt to intercept or redirect the funds for their own benefit, leaving the seller unpaid and the buyer without their money—or their home.

How can a crook gain access to funds that should be moving from one financial institution to another company and take control of the money transmission? By becoming a convincing imposter and tricking the buyer into sending money where it shouldn’t go.

A U.S. government agency, the Consumer Financial Protection Bureau (CFBP), has helped guard consumers, specifically in the area of financial services and products. The CFPB says that it “implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent and competitive…We aim to make consumer financial markets work for consumers, responsible providers and the overall economy.”

On its website, the CFPB provides information that warns buyers and sellers about avoiding a closing scam and explains how these scams can operate to trick consumers. Below are some of the details the CFPB has:

• Scammers will obtain information about your home buying status, either by surreptitiously getting private information from a financial institution, an unsuspecting real estate agent, a law firm involved in the sale, or some other informed source, and then will try to inject themselves into the closing by impersonating your real estate agent or loan officer from the mortgage lender.
• They will contact you or maybe contact the law firm (if one is involved) handling the closing and may be able to spoof, or fake, their phone number so it appears to be from the lender.
• The crook may claim there’s been a last-minute change for the account receiving payment or that the initial wire details were wrong and have now been corrected with new details that must be used.
• The scammer will then tell you or the law firm to wire the down payment or full purchase amount to this different account.
• After the mortgage agreement (the contract) is signed, the funds are wired to the incorrect account, and the money has disappeared.
• The fake account may be untraceable or, if it can be located, may already have been closed immediately after being used in the scam. By that point, both the scammer and the money are typically long gone, and the funds are often unrecoverable.

When dealing with all the people and organizations active in the closing (seller, lender, real estate agent, law firm and any others) always use a phone number or email address that has been verified and that you know is authentic.

Before the closing, contact all the parties separately to thoroughly verify the details of the closing, compare their information to be certain it matches, and confirm with everyone that nothing has changed that and that nothing seems unusual and suspicious.

Research lenders and examine loan details thoroughly to help avoid deceptive loan advertisements, especially from lenders you are not familiar with

As part of the home-buying process, you are likely to research, gather and compare mortgage loan quotes. During this process, you may encounter a wide range of advertisements and offers from banks, credit unions, dedicated mortgage lenders and other financial services companies that highlight only selected loan terms or conditions in their promotions. Some marketing materials may emphasize low interest rates or monthly payments and suggest that these rates or payments are “fixed” for the life of the loan. However, a closer review of the full terms and conditions may reveal details that make the loan less favorable for the home buyer and more profitable for the lender. Look at all the details in a prospective loan very carefully and do not rush into a commitment.

Advice on avoiding scams is available from state and federal government agencies

The National Cybersecurity Alliance, the state of New Jersey, GeorgiaLegalAid.org, the U.S. government’s Federal Housing Finance Agency and the U.S. Consumer Financial Protection Bureau are just some of the organizations and agencies that offer advice on avoiding home buying scams.

You can report a scam to federal and local government officials

The federal government agency the Federal Trade Commission (FTC) and other U.S. government agencies recommend that scam victims, or anyone who almost became a victim, report their experience to the federal or state government in some way:

• If you are a victim of a home buying or other type of scam, then report what you have encountered (with as many specific details as possible) to the FTC at its website ReportFraud.ftc.gov.
• According to the FTC, after completing a few short steps to provide information at ReportFraud.ftc.gov, your report should them become available to more than 3,000 federal, state and local law enforcers in the U.S.
• The FTC says that after giving your details about what happened to you, its website will offer advice on how to recover from the experience and how to better guard against future fraud.
• Fraud may also be reported to state and local government authorities; often to a state’s attorney general’s office.
• You also might contact your local consumer protection office as another option for reporting crimes.
• For legal assistance it may be useful to investigate and learn more about the information and services provided by local non-profit organizations that may operate in your area such as GeorgiaLegalAid.org, which provides the public with access to basic legal information and legal resources in the state of Georgia.

The FTC also has other, potentially helpful, free information and suggestions on paying mortgages that may be worth reviewing.

When deciding how to afford a home, you might want benefit from some financial BALANCE™

BALANCE™ is a financial education and counseling organization that offers free services to Delta Community members. Some of its services include credit report reviews, debt management, and information on budgeting, money management and home buying.

Visit the BALANCE™ website to learn about their education and assistance programs. Members can also speak with certified credit and housing counselors to get personalized guidance.

Want to connect with a Financial Coach about your specific situation? Call 1-888-456-2227 to speak with a Financial Coach today.

Note that the services offered through BALANCE™ are separate and distinct from any business conducted with Delta Community and are not guaranteed by, nor are they obligations of, the Credit Union.