Mortgage Application Fraud via Bank Transfer
How impostors posing as lenders collect bogus 'application' or 'lock-in' fees by bank transfer from hopeful borrowers.
Part of: Mortgage Application Fraud
Last reviewed: 1 June 2026
Some mortgage application fraud targets borrowers seeking financing by impersonating a lender or broker and demanding upfront fees by bank transfer. The scammer promises approval despite poor credit or offers an unusually low rate, then charges 'application,' 'rate lock,' or 'insurance' fees before any loan exists.
Bank transfers the borrower authorizes are hard to recover, and legitimate lenders typically deduct allowable fees through the documented loan process rather than demanding upfront transfers to a private account.
How this scam works on bank transfer
A borrower responds to an attractive loan offer online or by call. A 'loan officer' claims pre-approval and requests an upfront fee by bank transfer to secure the rate or process the application.
The borrower transfers the fee to an account the scammer controls. Additional fees — 'underwriting,' 'good faith deposit' — follow, each promised as the last step before funding.
The loan never funds. The scammer eventually stops responding, having collected fees by transfer to accounts that are quickly emptied. Borrowers in difficult credit situations are heavily targeted.
Common red flags
- A lender demands upfront fees by bank transfer before any loan exists
- Guaranteed approval regardless of credit or income
- Unusually low rates used to justify a 'lock-in' fee
- Fees paid to a private account rather than through documented closing
- Additional fees follow, each described as the final step
- The lender is not registered with your financial regulator
How to protect yourself
- Be wary of guaranteed approvals and upfront transfer fees
- Verify any lender against your national financial regulator's register
- Never transfer upfront fees to a private account to 'secure' a loan
- Insist that allowable fees be handled through documented loan processes
- If you transferred funds, contact your bank's fraud team immediately
- Compare offers with reputable, regulated lenders
How to report it
- Report to the U.S. Federal Trade Commission at ReportFraud.ftc.gov or your local equivalent
- Contact your bank to report the transfer and seek recovery assistance
- Report to your national financial regulator's fraud reporting service
Frequently asked questions
Do legitimate lenders charge upfront fees by bank transfer?
Reputable lenders disclose allowable fees through the documented loan process, not by demanding upfront transfers to a private account before a loan exists. Guaranteed approval combined with upfront transfer fees is a strong sign of fraud.