As more homeowners are struggling with buying a home, selling a home, or facing foreclosure, they’re more at risk for a loan scam. Watch out for these red flags for home loan and mortgage loan scams.  

If people are desperate, they will be willing to give money to someone that is selling an idea they want to believe. Barbara Floyd-Jones from NeighborWorks America says she thinks homeowners are now more aware that scams exist and that they need to protect themselves, but they might not be aware of the warning signs and red flags to watch out for.

1. Being asked for payment upfront. Scammers want to get paid, and they want to get paid without performing the service they’ve promised. Keep your guard up when receiving loan counseling; Floyd-Jones warns that the scammers have gotten smarter. They might not want to scare you off right away, so they might not ask for money until the second or third visit.

2. Promising outrageous results. A blanket statement like “We’ve received great results for our clients” is a big warning sign. A legitimate housing counselor has connections to the lenders and can submit information on behalf of owners. Counselors can advocate, educate, and keep a regular contact schedule with the lender, but they can’t guarantee the lender will do anything to help you. A scammer will promise the world if it means a desperate homeowner will hand over money.

3. Having a fake affiliation with a real resource. The most dangerous scammers are the ones who have masked themselves in a cloak of legitimacy. Yolanda McGill, senior counsel for the Fair Housing and Fair Lending Project, says that some loan scam companies use the word “law” in their names, while other scammers will pretend to be part of a non-profit organization or be associated with a bank. These factors can make it hard for a homeowner to see the scam coming. For example, a homeowner might be looking for HUD resources online and end up at a site that has HUD in its name but that has no affiliation with the real government resource.

4. Asking you to sign something you don’t understand. A legitimate organization, whether a government or non-profit resource, will make sure you understand what it is doing and what you need to do. Do NOT sign anything with the word “deed” in it or anything else you don’t fully understand. You could get yourself into a lot of trouble that goes beyond just giving some money to a loan scam operation.

5. Disappearing or refusing to answer communications. Once a scammer gets your money, he or she might stick around to get more payments from you, or the scammer could just disappear. If you think you’ve been sucked into a scammer’s trap, stop payment immediately. You might have to cancel the account completely because if it is a scam, the scammer is not going to just let you discontinue the payment. A smart tip for any kind of service: Use your credit card. With a debit card, the funds will come directly out of your checking account. With a credit card payment, if you find out later that you were involved in a scam, you can file a dispute with the credit card company. You might get your money back, and the credit card company can take the fraud up with the scam artist.

If you think you’ve been a victim of a home loan scam, file a report with a local housing counseling agency or at With your report, local and federal law enforcement can take action, and you can start to seek the help you really need from a legitimate housing counselor.