G E T S M A R T . . . Mortgage Fraud
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How to Avoid Mortgage Fraud in These Tough Times
Reported incidents of mortgage fraud in the U.S. have increased by 42% in the first quarter of 2008 from a year ago. These schemes victimize individuals and businesses, including low-income families lured into home loans they cannot afford, legitimate lenders saddled with over-inflated mortgages and honest real estate investors fleeced out of their investment dollars.
Some of the common real estate fraud schemes include:
- Property Flipping — A buyer pays a low price for property and resells it quickly for a much higher price. This may be legal but the lender receives false statements, it is not.
- Two Sets of Settlement Statements — One settlement statement is prepared and provided to the seller accurately reflecting the true selling price of the property. A second fraudulent statement is given to the lender showing a highly inflated purported selling price. The lender provides a loan in excess of the property value, and after the loans are settled, the proceeds are divided among the conspirators.
- Fraudulent Qualifications — Real estate agents assist buyers who would not otherwise qualify by fabricating their employment history or credit record.
- Beware of “no money down” loans. Also, be cautious of companies or individuals that claim they can eliminate your debt if you pay an up-front fee – it is a scam!
What to do:
- Get referrals for real estate and mortgage professionals when you want to buy or sell a home. Once you do, check out their licenses with regulatory agencies.
- Do your own research into what other homes in the neighborhood have sold for. Look into recent tax assessments of neighborhood homes.
- Don’t let anyone (i.e., a realtor, mortgage broker) talk you into making a false statement on your loan application i.e. overstating your income or lying about where your down payment is coming from.
- Never sign a blank document or a document containing blank lines. If you do not understand what you are signing, get an attorney who will review the documents.
If you are currently experiencing financial difficulties:
- If you are facing foreclosure, don’t fall for any of the fraud schemes, including the one where a perpetrator convinces a homeowner to sign over the house deed “temporarily.”
- Contact your lender before your situation gets too bad. They will most likely be willing to help you work out a solution before you lose your home.
If you have any questions or concerns, contact a reputable realtor, attorney or a member of the Bucks County Older Adults Task Force.
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