Mortgage Fraud You Should be Aware Of

When applying for mortgage for the purchase of a new home, you will be able to find many mortgage brokers and lenders who will assist you in obtaining the necessary funds. However, it is important for you to be aware of the different types of mortgage fraud that can occur. Some of them are discussed as follows.

Mortgage Fraud for Housing

When filling out the mortgage application form, it is essential that you provide accurate information on the form as providing false information can result in you committing mortgage fraud for housing. In addition, mortgage fraud for housing also includes the situation where you say that you are going to live your new house while in reality you are going to rent it out.

One of the reasons why someone would commit mortgage fraud for housing is for property ownership or to live in an expensive property, that they would otherwise not qualify for. Because misrepresentation of information is a serious offence, it is imperative to provide truthful and accurate information when applying for a mortgage.

Mortgage Fraud for Title

Mortgage fraud for title can occur when an individual uses your identification, false documents, or stolen identity for the purpose of changing the title on your house. When a fraudster uses your stolen identity, they can create false documents and take out a mortgage on your house. If the bank lends the funds to the fraudster under your name, then you would have to pay off the debt that has been taken out. Moreover, the fraudster can also leave you with a debt that you have not agreed to even if they did not change the title of the house.

To ensure the prevention of mortgage fraud for title, it is recommended that your regularly check your credit rating and the title of your house. Should you become the victim of a fraud, you would have to provide evidence that you did not authorize the mortgage and the title change.

Mortgage Fraud for Profit

This type of fraud is one of the more complex frauds because it requires more than one person working together to receive loans for a non-existent house or to inflate the price of a home. The motivating factor for this type of mortgage fraud for profit is financial gains and is usually executed by industry insiders such as real estate brokers, mortgage brokers, lawyers, title insures, lenders, or outside investors.

In order to prevent mortgage fraud for profit, watch your broker for any abnormal dealings. If they are pressurizing you to make decisions that you are uncomfortable with, then they could be attempting to defraud you.

Mortgage Fraud for Foreclosure

This type of fraud is usually targeted towards low-income homeowners who at risk of defaulting their loan payments or whose houses are in foreclosure. Some of the types of mortgage fraud for foreclosure include:

• A fraudster will offer you a debt-consolidation scheme which usually encourages you to pay upfront fees and transfer the property title to the scammer
• Generally, you get a cash pay-out from the scammer to pay for immediate bills and remain in the home paying consolidated debt payments or rent to the fraudster.
• You could be left homeless, in debt, or without the property title after the scammer sells or re-mortgages the property to an accomplice; and
• The scammer ignores bills and taxes and pockets each payment, leading to debt collections against you.