How to Protect Yourself from Real Estate Fraud in California
- Sara Naheedy, Esq.
- Nov 5
- 5 min read
By Sara Naheedy, Esq.
Attorney // Real Estate Broker
Understanding the Rising Threat of Real Estate Fraud
With California’s high property values and competitive housing market, it’s no surprise that scammers see opportunity. From fraudulent deeds to fake mortgage “relief” services, real estate crimes are becoming increasingly sophisticated—and costly.
The California Department of Real Estate (DRE) recently issued a statewide consumer alert urging buyers, sellers, and homeowners to stay vigilant. Many of these schemes take advantage of the complex nature of real estate transactions, making them difficult to spot until it’s too late.
As both an attorney and licensed real estate broker, I’ve seen firsthand how devastating these scams can be. The good news? With a few proactive steps, you can drastically reduce your risk of becoming a target.
1. Mortgage Fraud: When Numbers Don’t Add Up
Mortgage fraud happens when financial information is falsified to qualify for a loan—often inflating income or hiding debts. It can lead to default, foreclosure, and even criminal liability.
How to protect yourself:
Always disclose your true financial information.
Avoid brokers who pressure you into “creative” applications or too-good-to-be-true offers.
Read every document before signing and ask questions about unclear terms.
Work only with licensed lenders and verify their credentials through the NMLS Consumer Access portal.
2. Business Email Compromise (BEC): The Escrow Scam
In this scheme, hackers gain access to a real estate professional’s or escrow officer’s email account, then impersonate them to reroute wire transfers. Victims often lose their entire down payment.
How to protect yourself:
Always verify wiring instructions by phone using a trusted number—not one from an email.
Double-check the sender’s email address for misspellings or added characters.
Never trust last-minute changes to payment instructions.
Enable two-factor authentication for any email involved in transactions.
3. Deed and Title Fraud: When Your Home Is Stolen on Paper
Scammers forge documents to transfer property ownership to themselves, then sell or borrow against it. Many homeowners don’t find out until foreclosure notices arrive.
How to protect yourself:
Regularly review your property’s title records through your county recorder’s office.
Enroll in your county’s Deed Notification Program if available.
Be cautious of unsolicited requests to sign documents related to your property.
Consider purchasing or reviewing your title insurance policy for coverage options.
4. Foreclosure Rescue Scams: Preying on Financial Fear
Fraudsters promise to “save” homeowners from foreclosure—for an upfront fee. Instead, they pocket the money and disappear, leaving the homeowner in worse shape.
How to protect yourself:
Never pay upfront for foreclosure assistance.
Only work with HUD-approved housing counselors.
Avoid anyone guaranteeing to “erase” your mortgage or instantly stop foreclosure.
If you’re struggling with payments, talk to your lender or a licensed attorney before responding to unsolicited offers.
5. Property Flipping Fraud: Inflated Prices, False Promises
Not all flipping is illegal—but fraudulent flipping involves artificially inflated values and fake appraisals. Buyers end up overpaying for homes that need major repairs or don’t match their advertised value.
How to protect yourself:
Hire an independent inspector and a trusted real estate professional.
Review property permit history and disclosures carefully.
Be skeptical of “too good to be true” deals, especially in high-demand markets.
6. Equity Skimming and Straw Buyer Schemes
These scams target distressed homeowners or naive buyers. In equity skimming, scammers convince owners to transfer title in exchange for help avoiding foreclosure. In straw buyer schemes, a fake “buyer” uses another person’s credit to hide the real purchaser’s identity—often leading to default and liability for the innocent party.
How to protect yourself:
Never sign over your deed or title to anyone promising to “rescue” your home.
Don’t buy property in your name for someone else.
Review all contracts with an attorney before signing.
7. Mortgage Elimination Scams: The Fake Loophole
Beware of anyone claiming they can “eliminate” your mortgage for a fee. There is no legal way to cancel debt through a secret loophole. These scams often use fake legal documents and pseudolegal jargon to sound convincing.
How to protect yourself:
Never pay for “mortgage elimination” services.
Verify all claims with a trusted attorney or financial advisor.
Report suspicious services to the DRE, California Department of Financial Protection and Innovation, or Attorney General’s Office.
8. Elder Financial Exploitation: Protecting Senior Homeowners
Scammers often target older Californians, pressuring them to transfer title or sign over property rights. Because these crimes often rely on emotional manipulation, early intervention is key.
How to protect yourself or loved ones:
Involve trusted family members in real estate or financial decisions.
Be cautious of unsolicited offers to purchase or “manage” property.
Never sign documents you don’t fully understand. Seek professional review first.
How to Report Real Estate Fraud in California
If you suspect you’ve been targeted or defrauded, don’t wait. You can file a complaint directly with the California Department of Real Estate (DRE) at dre.ca.gov/Consumers/FileComplaint.html.
You can also report related mortgage scams to:
California Department of Financial Protection and Innovation – dfpi.ca.gov
California Attorney General’s Office – oag.ca.gov
Stay Informed
Real estate transactions are often the largest financial decisions people make—and that’s exactly why scammers target them. Protecting yourself starts with awareness, verification, and professional guidance.
If you’re buying, selling, or dealing with a complex real estate situation, don’t go it alone. At Sara Naheedy Law, APC, we help clients navigate real estate transactions safely and confidently, with legal insight backed by real market experience.
(949) 400-4956
Read Sara’s book: Stack the Legal Odds in Your Favor
Frequently Asked Questions
1. What is real estate fraud?
Real estate fraud refers to any deceptive or illegal activity involving property sales, mortgages, or ownership transfers. It can include forged documents, identity theft, wire scams, or false promises made to gain money or property. In California, common types include deed theft, mortgage fraud, and wire transfer scams during escrow.
2. How can I tell if a real estate offer is a scam?
Be cautious of deals that feel rushed, require upfront payments, or involve pressure to sign without reviewing documents. Red flags include unrealistic promises (like eliminating your mortgage debt), last-minute changes to payment details, or unlicensed professionals handling large transactions. Always verify credentials through official state registries and consult a trusted attorney before signing anything.
3. What should I do if I think I’ve been a victim of real estate fraud?
Report the incident immediately. You can file a complaint with the California Department of Real Estate (DRE) at dre.ca.gov/Consumers/FileComplaint.html, and notify your local law enforcement or district attorney’s office. You should also contact a qualified real estate attorney to help you protect your rights and prevent further damage.
4. Can a real estate attorney help me prevent fraud?
Yes. A real estate attorney can review contracts, verify title transfers, and ensure that your transaction complies with California law. They can also spot warning signs of fraudulent activity and guide you through safe closing procedures. Having a legal expert involved early can save you from costly mistakes later.