Mortgage Fraud Schemes and Ways To Avoid Them
A big reason why our economy is in such bad shape is because of fraudulent transactions related to real estate industry. Borrowers provided misleading information while other real estate professionals made arrangements to gain money from lenders.
Any party can commit mortgage fraud in the real estate industry, the buyer, the seller and the professionals. A buyer can be held liable for this when providing wrong information to the lender. This can be related to employment income. Aside from giving wrong information, the borrower may also be liable if he fails to disclose important information related like kickbacks from the seller or other deals that earns him money. A silent second mortgage is also a form of fraud. Here, the buyer uses money from the seller to pay for the down payment. He acquires a second loan to pay for the seller without informing the lender.
Real estate professionals can also create a scheme that results to fraud. Here, the lender loses. The common type of fraud they make is the fraudulent appraisal. Here, a professional appraiser is part of a group of professionals to complete the act. Instead of stating the real value of the property, he doubles it so that the consumer can borrow a bigger amount. In most cases, this is accompanied by an air loan, wherein there is no real borrower and all information is fabricated. This means that no one pays the mortgage and lender loses the money.
You can avoid this. It is essential that you avoid this at all times because this will cause you a lot of troubles. This will hurt both your reputation and you finances. Here are some of the ways on how you can avoid this:
1. Be informed. Familiarize the essential information related to the purchase of a house. Do not do anything that you suspect is wrong even if your agent says that it is not a big deal. Remember, that the law will hold you reliable for wrong information provided. Work with a trusted lawyer or an agent with good credentials to ensure that you will not encounter any problems.
2. Do not sign documents unless you have read and understood them. Do not hesitate to ask questions regarding items you do not understand. If the information stated in the document is wrong, do not sign it. Bear in mind that signing the documents represents your agreement to the information it contains.
3. Do not make arrangements with sellers or real estate professionals that are not disclosed with the lender, especially those that involve money and kickbacks. Do not agree to this even if they claim that this is all right. You can be held liable for these acts. If you suspect fraud, consult a lawyer right away.
You may have earned while participating in mortgage fraud. However, everyone loses here. Our economy is in such bad condition because of these schemes. This will translate to unemployment, foreclosure and more financial problems. This is why everyone has to help in fighting such fraud.