Mortgage Fraud: Everything You Need To Know and Why You Should Not Commit A Crime
Introduction
Why do people do it? Two primary factors contribute to why someone would commit mortgage fraud in the first place. Either a person will do it to have a place to live or they will commit mortgage fraud because there is a profit included.
The ones who commit the crime for housing usually know someone in the industry who can help them. A borrower is going to falsify evidence to get a rate they might not normally get otherwise.
The person knows someone with insider information who will help them achieve the mortgage they want.
Does the person have any intention of paying the mortgage? No, that is why it is only a matter of time before the person committing the fraud is caught.
The other kind is mostly done by those working in the industry and does not usually concern the borrower. Either way, both will land a person under house arrest and eventually, jail or prison.
The Common Scams With Mortgage Fraud Buyers Need to Know
1) The first kind is “property flipping”. At first glance, it might not seem like a crime, but it is. According to industry professionals, the crime is not in the flipping itself, but how a person goes about doing it.
Most flippers will buy the property, fix it up, and sell it off. That is legal. The other way is not legal. What happens is a person buys the house at a much lower price. They get an industry friend to help them fix it, and then, they sell it a higher price.
We like to call that “buying low and selling high”.
The problem is the person is using “a friend” in the appraiser field who knows the real value of the home. That is why it is called mortgage fraud. It can also land you under house arrest and you will serve time in prison after being convicted.
2) The second type is called “occupancy fraud”. A person will falsify evidence to keep in the bank’s good graces. They will often get a lower rate and lower out-of-pocket costs because of that good standing.
The person is “claiming” the house will be occupied by someone, when, in fact, it is not.
The more common types include identity theft, which is self-explanatory and misrepresenting the facts.
How Do Buyers Avoid These Scams?
The best way to avoid these crimes by knowing what they are. The better educated you are, the less you will do it. You should always tell the truth, no matter how painful it is. You should also work with a qualified professional when applying for a mortgage rate. You should walk out the door if you feel something is out of place.
Remember, this is a crime, a crime that will land you in jail if convicted.
Addys Dieguez with QualifiedTitle.com is experienced since 2002 in the Real Estate field, coordinates the interests of all parties to a real estate transaction, including the buyers, sellers, mortgage lender and real estate agents. We make sure that all requirements for settlement are fully satisfied and as an agent for Old Republic National Title Insurance Company & others, we issue title insurance to the buyers and the mortgage lender which insures them against loss from defective titles, liens, and encumbrances. Please call Addys Dieguez at 305-557-0590 or email at addys@qualifiedtitle.com
