January 10, 2023

Watch Out! What to Know About Home Warranty Scams

Estimated reading time: 3 minutes

Home warranties can be reliable and helpful services to homeowners. However, there has been an increase in scams over the past several years. Let’s go over what these scams look like, how to keep yourself safe, and how to find a reputable company.

What is a Home Warranty?

A home warranty is an optional service that helps cover home repairs or replacements of appliances and home systems that are affected by normal conditions. For a monthly or annual fee, a homeowner receives discounted repair or replacement services.

What Do These Scams Look Like?

Home warranty scam companies typically send letters to a homeowner’s new property address. The correspondence urges them to call a number regarding “time-sensitive” mortgage manners before a certain date. The letter may say home warranty coverage is about to end or urgently encourages the homeowner purchase a new warranty.

Some correspondence may even reference the name of your mortgage lender.

How Do These Companies Gather Your Information?

Homestead Funding is committed to protecting our customers’ personal information. We do not share or sell any private or non-public information. Some information, such as your name, new property address, and mortgage lender may be public record online or available from county or city records.

How Should You Respond?

It’s important to note that if threatening or unnecessary urgency is used, the letter you received is most likely a scam. Do not give out any of your personal information to a company that sends you a letter or cold calls you. It’s advised that you get rid of the letter and shred anything that contains your personal information. If you already hold a contract with a home warranty company, experts recommend calling them and explain the letter that was received.

Who Should You Talk to if You’re a Victim of a Home Warranty Scam?

If you believe you’re the victim of a home warranty scam, be sure to report the issue to a law enforcement agency. Reporting the scam will help agencies collect accurate data on the number of people affected.

Experts also recommend reporting the scam to:

  • Your state’s Department of Insurance
  • Your state’s consumer protection agencies
  • Your state’s Attorney General’s Office
  • The Better Business Bureau

Finding a Home Warranty That Works for You

A man standing in his kitchen with a coffee cup in one hand and his phone in the other. He's smiling down at his phone.

Even if there are a few bad eggs in an industry, you can still find a reputable home warranty company. Be sure to always read the terms and conditions of any contract before signing. In addition, you can search for the company on the Better Business Bureau’s website for legitimacy information and read reviews or outstanding complaints.

Keep an Eye Out for Red Flags

While searching for a company to work with, never work with a company whose claim process is unclear or if you have a hard time getting in contact with a human instead of an automated message. Additionally, home warranty companies are regulated under state consumer protection laws instead of federal laws. Be sure the company you’re working with is either registered or licensed to work in your state.


Ask your loved ones, your Real Estate Agent, or your mortgage lender for recommendations of home warranty companies they trust. If you’re looking for a mortgage lender that takes your security and privacy seriously, contact us today. Our Loan Originators will work with your individual needs to help you achieve your homeownership dreams.

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Homestead Funding offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.