Consumer Alert: Real Estate and Mortgage Fraud Awareness

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November 3, 2025

DRE Urges California Consumers to Be Aware of Real Estate and Mortgage Crimes

Sacramento, California – With its high property values and active real
estate market, California is particularly vulnerable to several types of real estate and
mortgage-related crimes. With that, the Department of Real Estate (DRE) urges Californians to be
cautious and educated on the different types of real estate and mortgage crimes it sees in the
real estate industry.

Many of these crimes prey on the complex nature of the home-buying process, making them difficult
for the average consumer to recognize. Below are the most common crimes that could present a threat
to California consumers, along with tips for avoidance. It is important to note that even
well-meaning individuals who are unaware of the full consequences may find themselves facing
legal scrutiny if they participate in or enable fraudulent activity.

1. Mortgage Fraud

Mortgage fraud often involves fabricating financial information, such as inflating income or misrepresenting assets, to qualify for a mortgage that the borrower cannot afford. In California, with its high property values and competitive market, individuals might be tempted to misrepresent their finances or the purpose of the loan to secure loans. This can lead to financial ruin when the borrower defaults on the loan, but it also harms the lender and contributes to the larger issue of housing market instability.

Tips for Avoiding Mortgage Fraud:

• Always disclose your true financial situation to lenders.
• Be cautious of mortgage brokers or agents pushing you into loans that seem too good to be true.
• Never sign any documents you do not fully understand or that contain unclear terms.
• Work with reputable financial institutions and real estate agents and verify their credentials.

2. Business Email Compromise (BEC) in Real Estate

This type of fraud is becoming increasingly sophisticated. Criminals hack into email accounts of real estate professionals or escrow officers and impersonate them to trick homebuyers into transferring large sums of money to fraudulent accounts. California's tech-savvy real estate market is particularly susceptible, with high-value transactions at risk.

Tips for Avoiding BEC in Real Estate:

• Always verify payment instructions with a phone call to the escrow officer or real estate agent-especially for wire transfers.
• Be cautious if you receive unsolicited emails asking for changes to payment instructions.
• Look out for unusual email addresses or slight changes in email domain names that appear legitimate at first glance.
• Use multi-factor authentication (MFA) for any email accounts linked to real estate transactions.

3. Deed and Title Fraud

Deed and title fraud are a growing concern, particularly in California’s more populated areas. Scammers forge deeds and use fake identities to transfer ownership of properties. Once the property is in the fraudster’s name, they may sell it or take out a loan against the property, leaving the original owner unaware until it is too late.

Tips for Avoiding Deed and Title Fraud:

• Regularly monitor your property records for unauthorized transfers or changes. If your county recorder’s office has a deed notification program, sign up to receive notices.
• If you receive any unusual or unsolicited documents, consult with a title company or attorney before taking any action.
• Consider purchasing title insurance, especially for properties in high-risk areas.
• If someone contacts you asking to transfer ownership of your property, verify their legitimacy.

4. Foreclosure Rescue Scams

Many homeowners facing financial difficulties may fall victim to foreclosure rescue scams.
Fraudsters pretend to be experts who can help prevent foreclosure, but their real goal is
to steal fees upfront without providing any real assistance.

Tips for Avoiding Foreclosure Rescue Scams:

• Never pay upfront fees for foreclosure help—legitimate programs will not ask for this.
• Always check if the company offering help is HUD-approved or affiliated with legitimate government programs.
• Seek assistance from a certified housing counselor before agreeing to any services.
• Avoid deals that promise to immediately stop foreclosure or wipe out your debt.

5. Property Flipping Fraud

In property flipping fraud, scammers purchase distressed properties, make minimal repairs (or no
repairs at all), and then sell the property at a drastically inflated price. They may also
manipulate appraisals to deceive the buyer about the true value of the property.

Tips for Avoiding Property Flipping Fraud:

• Always hire a reputable real estate professional or inspector to help evaluate the property and transaction.
• Be skeptical if the price seems too good to be true—especially in markets where home prices are generally high.
• Ensure the property appraisal is done by an independent third party and not someone with a financial stake in the sale.
• Ask for detailed information about the history of the property’s permits, repairs, and improvements. Many local building departments even provide access to permit history online.

6. Equity Skimming

Equity skimming occurs when a fraudster convinces homeowners who are struggling with payments to
transfer ownership of their property, often with the promise of saving their home. Instead, the
fraudster collects rent or mortgage payments from the homeowner and never pays off the original
mortgage.

Tips for Avoiding Equity Skimming:

• Never sign over the title of your home to anyone claiming they can help you avoid foreclosure.
• Work only with reputable lenders, real estate agents, and housing counselors who don’t ask for ownership rights or power of attorney.
• Read all documents carefully before signing and consult an attorney if anything seems unclear.
• Be cautious of individuals offering to “rescue” you in exchange for quick decisions or immediate transfer of property.

7. Straw Buyer Schemes

Straw buyer schemes involve an unsuspecting consumer purchasing a home on behalf of someone else,
often to hide the identity of the true buyer who may not qualify for the loan due to poor credit
or other reasons. This can result in the consumer, aka the straw buyer, being held liable for a
loan they can't afford, leading to potential foreclosure, negative impacts to credit, and other
risks.

Tips for Avoiding Straw Buyer Schemes:

• Always verify the identity and financial standing of anyone you are dealing with in a real estate transaction.
• Never agree to buy property on behalf of someone else without understanding the full risks and consequences.
• Make sure all mortgage and loan paperwork reflects accurate information and fully discloses the true buyer.
• Work with a reputable lender that follows all appropriate verification procedures.

8. Mortgage Elimination Scams

Fraudsters offering mortgage elimination scams will tell homeowners they can "eliminate"
their mortgage debt through a legal loophole for a hefty fee. These offers are completely
false, and no such legal loophole exists.

Tips for Avoiding Mortgage Elimination Scams:

• Be highly suspicious of anyone claiming they can cancel or eliminate your mortgage for a fee.
• Always seek advice from a trusted financial advisor or housing counselor before paying for any mortgage “relief” services.
• Report suspicious mortgage elimination services to state regulatory agencies or law enforcement, such as the DRE, the California Department of Financial Protection and Innovation, or the California Attorney General’s Office.

9. Elder Financial Exploitation in Real Estate

Scammers often target older adults with high-value properties, taking advantage of their
trust to persuade them to sell or transfer their home under suspicious circumstances.

Tips for Avoiding Elder Financial Exploitation:

• Always involve trusted family members, friends, or professionals in financial decisions, especially for older adults.
• Be cautious about unsolicited offers, especially those targeting seniors with no prior relationship.
• Avoid signing anything without thoroughly understanding the document—consult with an attorney or financial advisor first

How Consumers Can Protect Themselves

California’s real estate market presents a number of risks to consumers, but with due diligence,
research, and professional assistance, you can protect yourself from falling victim to these common
frauds. Always trust your instincts and seek advice from trusted professionals before making any
major financial decisions. If you believe you have been a victim of a mortgage crime or have a
concern or complaint about a real estate salesperson or broker, you can file a complaint with
DRE: https://dre.ca.gov/Consumers/FileComplaint.html

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