Did you know that 40% of homes in the United States are free and clear of a mortgage? This means that the other 60% of homeowners are still dealing with mortgage payments and working towards owning their home. For those still making payments on their homes, it is a good idea to learn more about mortgage fraud to make sure that you are never a victim of it.
Keep reading to learn about the most common types of mortgage fraud in our article below.
1. Foreclosure Scams
When a homeowner falls behind on their mortgage loan they are at risk of losing their homes and everything that they have paid towards it. Sometimes there are dishonest people that will tell them that they can save their home in exchange for a deed transfer and upfront fees.
Once the homeowner gives this up the fraudster will re-mortgage the property and not save the property from a foreclosure leaving the homeowner without a home or a deed. If this ever happens to someone you know make sure to contact a reputable real estate attorney to help you fight.
2. Inflated Appraisals
When a lender gives money for a mortgage they determine how much money to loan out based on the appraisal of the home. In some cases, this appraisal is inflated to make it seem like the home is worth more than it actually is. This causes the lender to lend the potential homeowner more money than they actually needed to purchase the home.
In this type of mortgage fraud, the appraisers can become implicit if they write that a home is worth much more than it actually is.
3. Property Flipping
There are some cases where people falsify loan documents when they are buying property to fix up and sell at a profit. Flipping the property itself is not what is illegal, but if income information, appraisals, or other paperwork is falsified in order to acquire the property, that is where the fraud comes in.
Tips to Avoid Mortgage Fraud
You want to do your best to protect yourself from becoming a victim of mortgage fraud in order to avoid facing fines or even jail time. Make sure that you get referrals for mortgage professionals from family and friends that you trust.
Another tip is to find out what other homes in the area have sold for and compare it to the property you are considering. This will help verify that the property’s value is assessed correctly.
Feeling Like a Mortgage Fraud Pro?
Now that you are aware of the most common types of mortgage fraud, you can make sure that you do not fall victim to any of the above. Usually, the consumers that are at higher risk of becoming victims of mortgage fraud are those that have a hard time obtaining a loan.
Make sure that you are completely honest in your application to make sure that you stay clear of getting in trouble.
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