Why do I get so many scam mortgage letters after buying a house? Digital safety for homeowners

Picture this: you’ve just settled into your new home when your mailbox starts overflowing with letters that look urgent. Some claim you need to act fast to lower your mortgage payment, others offer deals too good to be true, and a few might even look like they’re from the government.

It’s overwhelming!

While most of these are junk mail (which are harmless, albeit annoying), some are scams crafted to take advantage of homeowners. They may seem convincing, but knowing what to watch for can save you from falling victim. Let’s talk about how you can stay safe and stress-free when dealing with mail.

Why New Homeowners Are Targeted

Scammers frequently target new homeowners because public records provide details about property transactions, including your name, address, and lender information. This makes it easy for fraudsters to create convincing scams that appear legitimate. They take advantage of the fact you’re busy unpacking, and likely overwhelmed by all the tasks and paperwork. This split attention makes it harder to spot red flags.

From fake mortgage insurance offers to fraudulent deed services, these scams aim to exploit your lack of familiarity with the process. But knowledge is power—and knowing what to look for is the first step in protecting yourself.

Common Scams to Watch For

Scammers are creative and regularly changing, but their schemes often share common tactics. Below are some of the most prevalent scams targeting new homeowners, along with practical tips to protect yourself.

1. Fake Mortgage Protection Insurance

Shortly after closing on your home, you might receive an official-looking letter claiming you need to purchase mortgage protection insurance or a scam phone call from an official-sounding organization. While this type of insurance does exist, it is never mandatory.

How to Protect Yourself:

• Verify Requirements: Mortgage protection insurance is optional. Check with your lender to confirm what insurance, if any, is required for your loan. While you’re talking with your lender, you can also ask for insurance recommendations, to make sure you’re using a legitimate, trustworthy service,

• Research Before You Buy: If you’re interested in this type of coverage, consult a trusted insurance advisor or your lender for legitimate options. Just like you almost never buy the first house you look at, you’ll want to look at insurance options.

• Ignore Pressure Tactics: Scammers often try to create urgency. Take your time to review any offers thoroughly.

2. Deed Fraud

Another common scam involves letters offering to provide a certified copy of your property deed for a high fee, often disguised as a government service. These letters might warn you about penalties or fines if you don’t act quickly, once again tricking you into making rash decisions. It’s tricky because… technically they are providing a service, so this is not like a typical scam where they take your money and give you nothing. However, these letters are intentionally charging you 5x - 10x the real cost for a copy of your deed.

How to Protect Yourself:

• Understand Your Rights: You should receive a copy of your deed from your title company or county recorder after closing.

• Contact Your County Recorder: If you ever need another copy, your county recorder’s office can provide it for a nominal fee, usually less than $10, not the $100 or $150 quoted by the scam letter you receive in the mail.

• Ignore Unsolicited Offers: If a letter demands payment for services you didn’t request, it’s likely a scam.

3. Phishing Scams During Closing

Phishing scams are particularly dangerous during the home-buying process. Fraudsters hack email accounts to impersonate real estate agents or lenders, sending fake instructions to divert your closing funds to their own accounts.

How to Protect Yourself:

• Verify Instructions: Always confirm wiring instructions in person or over the phone using a trusted contact number.

• Be Skeptical of Changes: Last-minute changes to wiring details should raise a red flag.

• Pause and Review: Double-check all details before transferring any money. Because of the drastic increase in this type of scam, we recommend having your lender on the phone while you make the transfer, triple checking each number to ensure the money is being sent to the correct account.

• Report Suspicious Activity: Notify your bank and the FBI if you suspect fraud. If you fall victim to this type of scam, contact the FBI IC3 immediately and they might be able to recover a percentage of your money (as long as it’s been less than 24 hours).

4. Loan Modification Scams

Scammers prey on homeowners facing financial difficulties, offering to renegotiate loan terms for an upfront fee. These offers often promise lower payments or interest rates but deliver nothing in return.

How to Protect Yourself:

• Work Directly With Your Lender: Legitimate loan modifications are handled through your lender or HUD-approved programs.

• Avoid Upfront Fees: Charging advance fees for loan modification services is illegal in many states.

• Consult a Housing Counselor: A HUD-approved counselor can provide free or low-cost assistance.

5. Homestead Exemption Scams

In some states, such as Texas, new homeowners are eligible for a homestead exemption to reduce property taxes. Scammers send letters offering to file this exemption for a fee, often using official-looking seals and language.

How to Protect Yourself:

• File It Yourself: Filing for a homestead exemption is usually free or requires only a small fee. Visit your county’s official website for forms and instructions.

• Call Your Tax Office: If you’re unsure about the process, your local tax assessor’s office can guide you. This varies by county.

• Ignore Unsolicited Offers: Legitimate government agencies will not contact you asking for payment to file exemptions.

6. Home Warranty Scams

After closing, you might receive offers for home warranties covering repairs for appliances and systems. While legitimate home warranties exist, many unsolicited offers are scams.

How to Protect Yourself:

• Research Companies: Check reviews and the Better Business Bureau for information on the company.

• Read the Fine Print: Understand what the warranty covers and watch for hidden fees.

• Consult Trusted Sources: Ask your real estate agent or lender for reputable recommendations.

Why Awareness Matters

Scams can happen to anyone, but being informed gives you the upper hand. By recognizing the signs of common scams and following these practical tips, you can protect yourself and your loved ones from financial and emotional harm.

Conclusion

Scammers are always evolving their tactics, but the core of their schemes remains the same: to exploit trust and confusion. In this blog post, we explored why new homeowners are targeted, discussed prevalent scams like fake mortgage insurance, deed fraud, and phishing, and provided actionable steps to safeguard yourself. Remember, staying informed is your best defense.

If you ever feel uncertain about a letter, email, or phone call, pause and verify the information through trusted channels.

Share this information with friends and family to help them stay protected, too, and make sure to check out other guides in our resource center. Together, we can outsmart the scammers and build a safer, more informed community.