Promised a No-Down-Payment Home Loan? Check Before You Pay an Upfront Fee

What is the warning about?

People shopping for a home loan may see offers for “100% financing,” “no down payment,” or “guaranteed approval.” Some offers also demand an upfront fee and promise that the money will be refunded.

On October 1, 2026, DRE (the California Department of Real Estate) warned about advance-fee scams connected to real-estate loans. The agency said scammers may use a real loan originator’s or lender’s license, or create a fake license.

According to DRE, a fee described as refundable may become nonrefundable after the consumer pays. The consumer may then be told that they no longer qualify or that the loan process will be delayed.

The warning applies statewide. DRE did not report a victim count, dollar loss, or a specific Orange County case. There is no basis in the warning to say that this scam occurred in Little Saigon.

An upfront fee is not automatically fraud

The warning is not a legal conclusion about every transaction. DRE tells consumers to use caution when a lender or loan-related service asks for money upfront. The agency does not say that every upfront fee is fraud.

DRE’s August 4, 2026 guidance explains advance-fee rules for real-estate brokers collecting money before providing real-estate services. Before collecting that type of fee, a broker must submit the agreement, accounting format, and advertising materials to DRE. The broker may collect under the applicable terms only after DRE issues a “no objection” letter.

That rule is not permission for every lender to charge every fee. It also does not prove that a particular loan-origination fee is lawful. If the rules are unclear, ask DRE or a licensed professional about the specific transaction.

Check the person and company with the right regulator

A real license can be misused to make an offer look trustworthy. Do not rely only on a license image or logo in a text message. Open the regulator’s official search page yourself and compare the person’s name, company, license number, and contact information.

DRE provides a search for real-estate brokers and salespersons. But not every mortgage professional is licensed by DRE.

DFPI (the California Department of Financial Protection and Innovation) oversees some mortgage loan originators. A person working under the California Finance Law or the California Residential Mortgage Lending Act must hold a DFPI MLO license and work for a DFPI-licensed company.

If you do not know which regulator covers the person offering the loan, get contact information from the agency’s official website. DFPI asks callers to leave the company name, NMLS number if available, callback number, and a short description of the concern. Finding a license confirms a registration record; it does not confirm a promise, fee, or contract.

Stop and ask before sending money

Recognizing a red flag is one step. Checking the offer before paying is the next.

Step 1: Request written terms. Ask for an agreement that states the service, amount, refund conditions, and recipient of the money.

Step 2: Call through an official source. Use contact information from DRE or DFPI, not a number that appears only in the offer. Compare the person’s name, company, license number, and NMLS number if available.

Step 3: Pause when someone pressures you. If the person says “today only,” promises a guaranteed refund without written terms, or pushes you to pay immediately, do not send money just to preserve a promise.

You can ask a family member or licensed professional to review the paperwork with you. Asking questions does not make a legitimate loan disappear.

If you suspect conduct involving a real-estate broker or salesperson under DRE’s jurisdiction, you can file a complaint with DRE. The agency may investigate license-related violations, but it cannot order a refund, cancel a contract, or award damages.

For questions about a mortgage loan originator within DFPI’s jurisdiction, call the agency at the number below. If you were contacted online, you can report suspected fraud to the FBI’s IC3 and the FTC. For a non-emergency incident, contact the police department in the city where the transaction occurred or where you live.

Contacts

• DRE license lookup:
  dre.ca.gov
• DFPI mortgage-lending questions:
  (866) 275-⁠2677
• FTC fraud report:
  ReportFraud.ftc.gov
• FBI cybercrime report:
  ic3.gov
• Westminster Police, non-emergency:
  (714) 548-⁠3212
• Garden Grove Police, non-emergency:
  (714) 741-⁠5704
• Fountain Valley Police, non-emergency dispatch:
  (714) 593-⁠4483

A promise of easy financing can sound especially attractive when a family is trying to buy a home. DRE advises consumers not to rush and to ask questions when they have concerns. The next step belongs to the borrower: verify the license, read the terms, and pay only when the service and conditions are clear.

Translation assisted by AI and reviewed by an editor.