How to spot and avoid HELOC scams

Scammers exist in every industry, and HELOCs aren't immune. You can work to protect the equity in your home once you know how HELOC scams work. 

Home equity scams could target your home in several ways. Someone might use your personal information to apply for a home equity line of credit (HELOC) in your name or make unauthorized transactions on an existing account. Other scams target your home more directly, such as via fraudulent deed transfers or mortgage-relief schemes.

Scams often look legitimate. A fraudster might use a real lender’s name, official-looking documents, or an urgent phone call to gain your trust. 

The warning signs of home equity fraud tend to follow a pattern. The earlier you catch them, the better your chances of avoiding serious financial damage.

What are HELOC scams?

HELOC scams involve fraud or identity theft aimed at opening, accessing, or manipulating a HELOC without your authorization. 

Related home-equity scams could also target the property’s title or use promises of mortgage relief to obtain money, personal information, or control of the property. Common examples include identity theft, title or deed fraud, and mortgage-relief scams. 

It’s easier to recognize unusual requests once you understand how legitimate home equity borrowing works. Read our guide on how a home equity loan works for the basics.

Common HELOC scams and how they work

Some types of HELOC fraud are more common than others. Here’s how they work and what to watch for before you’re caught off guard.

Home equity fraud through identity theft

Identity theft can lead to home equity loan fraud when someone uses stolen personal information to apply for a HELOC in your name. Once the line of credit is open, the thief can withdraw cash, potentially leaving you on the hook for the debt.

A credit freeze could help prevent someone from opening new accounts using your information while the freeze is active. It's free to freeze your credit with each of the three major credit bureaus, and you can do it easily online through each bureau's website. 

You can also spot accounts you don't recognize by checking your credit reports regularly. You're entitled to one free credit report from each bureau weekly through AnnualCreditReport.com, the official source. 

Title or deed fraud

Title or deed fraud involves fraudulent changes to your property’s ownership records. A fraudster might try to transfer the deed and then borrow against or sell the property.

You may come across services marketed as “title lock” protection. These services generally monitor property records and alert you to changes; they don't function as insurance against title fraud. Your county might offer property-record monitoring at no cost, depending on where you live. 

Foreclosure-rescue and mortgage-relief scams

Some scams target homeowners who are having trouble keeping up with their mortgage payments. A person may promise to prevent foreclosure, lower your payments, or negotiate with your lender in exchange for money or personal information.

Be cautious if someone asks for an upfront fee, tells you to stop communicating with your lender, or asks you to sign documents transferring your home. Verify any offer directly with your mortgage servicer before taking action.

Warning signs of a HELOC scam

Be on guard for these potential signs of HELOC fraud:

• Requests for sensitive information, especially over email

• Documents that transfer or change ownership of your home

• Unsolicited loan or mortgage relief offers

• Unauthorized accounts or transactions on your accounts

• An upfront fee before a promised service is provided

• Pressure to act immediately or lack of documentation

• Instructions not to contact your lender or servicer

• Requests to pay by wire transfer, cashier’s check, or mobile payment app

If you’re contacted unexpectedly, don’t use the phone number or link in the message to verify the offer. Instead, contact your lender or servicer using the phone number on your statement or its official website.

How to protect your home equity from fraud

A few simple precautions could help protect your credit and home equity:

• Freeze your credit. A credit freeze is free and could prevent someone from opening new credit accounts using your information.

• Consider a fraud alert. A fraud alert adds another layer of protection if you suspect someone has used your information. Placing an alert requires creditors to verify your identity before opening new accounts. It’s free, lasts one year, and placing it at one bureau automatically notifies the other two.

• Check your credit reports. Free reports from all three bureaus are available at AnnualCreditReport.com. Look for accounts, addresses, or inquiries you don't recognize.

• Monitor property records. Your county may offer a free service that alerts you when a document is recorded against your property. Check directly with your county to find out what's available.

• Review HELOC statements. Dispute any draws, payments, or other activity you don't recognize.

• Protect your online accounts. The Cybersecurity and Infrastructure Security Agency (CISA) recommends using strong, unique passwords and enabling multifactor authentication (MFA) when available.

Many of these basic protections are available for free, including credit freezes, fraud alerts, and credit reports.

Achieve is not a Credit Repair Organization and does not provide or offer services or advice to repair, modify, or improve your credit.

What to do if you’re a victim

If you think someone has used your information or home equity without your permission, act promptly:

• Report identity theft at IdentityTheft.gov and follow its recovery plan.

• Contact your loan servicer directly and report any unauthorized activity.

• Place a credit freeze and fraud alert with the three credit bureaus if you haven’t already.

• Dispute fraudulent accounts or charges and keep copies of your communications and supporting documents.

• Contact the fraud department of the company where the fraud occurred and ask about closing or freezing the affected account.

You may also want to contact local law enforcement or an attorney if someone has altered your property records or transferred ownership without your permission.

Choose a lender carefully

You could help avoid HELOC fraud by working with a legitimate lender. Verify the lender’s identity before sharing personal or financial information, and be cautious about unsolicited offers or those that pressure you to act quickly.

You can apply for a HELOC directly through Achieve Loans without going through a third party. 

Find out if you qualify today.