Mortgage Fraud has never been as prevalent as it is today. In the past two years, it has increased so much that the FBI has put out a strong Mortgage Fraud Warning Notice, which the Mortgage Bankers Association is promoting.
The activity in the lending industry has increased so much that there are more opportunities. In addition, the rise in defaults and foreclosures is also linked closely to the increase in Mortgage Fraud. John Fleming, general counsel for the Texas Department of Savings and Lending has said that as the housing bubble has burst in some of the hotter markets, significant fraud has now come to the surface. In addition, mortgage programs that did not require substantial verification of underlying facts including income verification also created a hotbed for fraudulent activities.
Among the top instances of Mortgage Fraud are “fraud-for-profit” and “illegal property flipping” which include factors such as fraudulent and/or multiple loans and false appraisals. Usually, the perpetrators leave everyone involved in a difficult – if not criminal – situation. The lender is left with major monetary losses. Usually, the consumer is unaware of what has happened and can end up with a loan that is more expensive than the property, and often, ruined credit. As of late foreclosure fraud has become more common. Scammers often offer to help distressed homeowners out of their situation by paying off their mortgage, but instead, through a series of loans, refinancing and sales transactions or transfers of property, the scammers end up taking the profits, not paying the lender – who then has to foreclose on and evict the existing, already distressed and vulnerable homeowner.
In view of the increased amount of Mortgage Fraud, everyone involved in the loan process from the applicant or prospective homeowner to the lender and all parties in between need to know what the signs are and how to protect themselves. They need to know what the signs are, such as interest rate surprises, undisclosed costs, predatory financing (being bullied into an inappropriate loan or unacceptable terms), and title scams. It is important to know the steps to take to avoid Mortgage Fraud, such as thoroughly researching the property and looking for red flags.
Mortgage Fraud can affect everyone in a negative way. A Real Estate Professional can guide you through the purchase process, helping you to do your research to protect yourself. If you are thinking of purchasing property and want to avoid any types of potential mortgage fraud, talk to a professional and be sure to also make accurate disclosures.
To schedule a free consultation call me at 281-212-7076.