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Mortgage Fraud, Explained



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By : Roby Hicks    99 or more times read
We all contribute in the kind of economy we have today. However, the biggest contributors are the fraudsters who victimized lenders and buyers. Fraud is rampant in real estate industry because of the many schemes that one can devise. Among the most common type is the mortgage fraud. But what do we really know about it? When can we say that there is fraud? And, what are the ways to avoid it.

There are several acts that can be considered fraudulent. This includes any omission of essential information or providing wrong information that can significantly affect the mortgage or the property to be purchased.

Fraudsters are made up of all types of parties in the real estate industry. They could be brokers, real estate agents, borrowers, sellers, appraisers and even buyers. A buyer can be held liable for non-disclosure of essential information like kickbacks, second mortgage and the like. He can also be accountable if he provides wrong information like his income and occupancy in the property.

The professionals can also work together to perform a fraudulent act against a lender. An example is an air loan. Here, a group of professionals work together to provide fake information. They fabricate information of a buyer and a house that does not exist. Once the mortgage is approved, they divide the money among themselves and disappear. Since information about the buyer is fabricated, lender will not be able collect payment, thus the lender loses the money.

Identity theft is also a common tool used by fraudster in mortgage fraud. They steal information from others and apply for mortgage using that information. They walk away with the money and the person whose identity is used will be held liable. This can be a real pain because proving that you are a victim of identity theft can be very difficult. Avoid this by keeping your essential information private. Do not fill out forms with your information if not necessary. Most importantly, check your monthly bills monthly as well as your credit report regularly to spot anomalous transactions.

Avoid fraud. You can do so through the following:

  • Make informed decisions. You need to do your research of the basic practices, requirements and information needed to purchase a home. If your seller or agent asks you to do something, which translates to lying, then do not do it. You can also avoid problems if you choose your agent or lawyer wisely before looking for a home to purchase.

  • Read documents carefully. If you do not agree to the information stated there or if the information are wrong, do not sign it. Do not hesitate to ask questions too. If you understand the terms, ask questions. It would also be better if you have a lawyer with you. Let him review the documents before you sign them.

  • Finally, do not agree to any wrong doings proposed by your agent, broker or seller. If the deal involves kickbacks, other money matters, falsifying information, then something is definitely wrong. Report this right away.

Do not participate in any fraudulent act. Additionally, do not be a victim of fraud too. You can avoid this if you do your research and learn about the fraudulent schemes used in the market today. Most importantly, report any acts that you suspect is fraudulent. This is a start to eliminate such scheme in the market.
Visit the Dallas Community Guide. Check out the Los Angles Area Real Estate and the San Diego California Home Blog as well.

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