Skip to Page Content | Skip to Site Navigation | Skip to Section Navigation

4 Smart Ways to Help Combat Mortgage Fraud Scams Targeting Seniors

May 23, 2017

A woman in her 80s applies for a cash-out refinance mortgage to access her home equity, after a lifetime of saving so she can relax financially. After the loan closes, the woman alleges she didn't know she'd applied for this mortgage. An investigation reveals that:

  • No one involved in the loan worked with the woman personally – all communications were by phone, email and mail.
  • The woman could no longer make such a financial decision and her power of attorney had changed hands multiple times.
  • Someone may have attempted to steal her hard-earned equity once loan proceeds were in her bank account. 

Thankfully, Freddie Mac learned about this before a theft occurred. The funds were returned to the Seller/Servicer and the mortgage was canceled at no cost to the borrower.

Unfortunately, scenarios like this happen far too often and end far less happily. In a recent Virginia case of widespread mortgage fraud, "after being contacted by another member of the conspiracy and told that their mortgage modification had been approved, the victim homeowner would be told that their lender required a 'reinstatement fee,' usually in the amount of thousands of dollars."

Why Are Seniors Targeted?

Fraudsters look for the most vulnerable targets to exploit. Seniors are especially susceptible to predators who are out to fleece them since many older people:

  • Live on fixed incomes and grapple with fears about supporting themselves throughout old age.
  • May not be aware of how advanced technology is and how sharing a little personal information with an untrusted source can lead to a lot of trouble down the road. 
  • Face physical and cognitive challenges which can impair their judgment. 

"Mortgage fraud aimed at seniors is reprehensible," says Robb Hagberg, Senior Director of Fraud Risk. "Freddie Mac is committed to educating our customers and the public about what to watch for and how to combat this particularly alarming type of fraud that targets seniors."

Fraud Aimed at Seniors is Widespread

The New York Times reports that, "As many as 17 percent of Americans 65 and older report being the victim of financial exploitation, according to the Consumer Financial Protection Bureau. Estimates of annual losses are in the billions of dollars. One factor that may play a role is mild cognitive impairment, a condition that can be a precursor to dementia and can diminish an older person's ability to make financial decisions."

Even more seniors – one in 10 – are victims of fraud or abuse, and that figure is probably underreported, based on a recent National Center on Elder Abuse webinar, which was hosted in honor of World Elder Abuse Annual Awareness Day (June 15).

Red Flags for Mortgage Fraud Scams Targeting Seniors

Encourage your older borrowers, and trusted family/friends assisting them, to look out for these red flags and follow ways to combat them:

Red Flag #1: You don't know the person making the offer. 
Only listen to someone you trust. Don't sign anything until you've vetted it with someone who both understands the financial implications and has your best interest at heart.

Red flag #2: You're asked to sign something right away and/or must "act now" on the offer.
Be skeptical of all offers, especially unsolicited ones and those that require you to commit immediately. Give no personal information to a stranger in person, over the phone or through email. Always ask for everything in writing so you can think it through and take time to talk through the options with a trusted family member, friend or advisor.

Red flag #3: You're told you don't need to worry about the fine print.
First, don't wait until you're desperate to refinance or get a reverse mortgage. Second, if you're considering a refinance or reverse mortgage, which are advertised frequently these days, read the fine print about the various plans and consumer protections in place to safeguard your financial interests. (Note: Freddie Mac doesn't buy reverse mortgages, mortgages, but we try to warn our customers and the public when we learn of potential risks and scams.)

The Top Four Actions Seller/Servicers Should Take

It's important to be aware of the added challenges and risks older borrowers face. Freddie Mac recommends that Seller/Servicers follow these four actions to mitigate mortgage fraud scams targeting seniors:

  1. Make sure your older customers are very clear about what's happening with all transactions.
  2. Double down on your due diligence in investigating all requests, claims and supporting documentation to uncover false or misleading information and/or statements.
  3. Watch out for any unscrupulous individuals, including members of the prospective borrower's family, who might be unduly influencing the older customer. You can contact your local adult protective services agency via the federal eldercare locator website, to request they investigate potential senior exploitation.
  4. Contact Freddie Mac immediately if you suspect fraud related to any loans we're working on together. Call (800)-4FRAUD8 or email Mortgage Fraud Reporting

New! Freddie Mac Fraud Homepage

We've just launched our new Single-Family Fraud Risk homepage. Please visit and bookmark our new homepage, where it's easier to find Freddie Mac fraud prevention and mitigation news, updates, information and resources.

For More Information

Back to Top