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Mortgage fraud is becoming a fast-growing crime because of the size of the profits that can be made. According to USA Today, the Federal Bureau of Investigation (FBI) received about 17,000 reports of suspected incidents from lenders alone. It's a difficult crime to detect because most of the incidents are committed by those in the industry. That is why it can be crucial for anyone buying a home or refinancing their mortgage to seek a reputable lender.
What Is Mortgage Fraud?
Mortgage fraud is the act of making false statements on your paperwork during the loan application process or not disclosing information that is required by the lender. The purpose is to qualify for a loan that is larger than you would normally qualify for under the lender's guidelines. Common fraud schemes can include: inflating the appraised value of the property being financed; lying about the source of a buyer's down payment; not disclosing the actual amount of the closing costs paid by the buyer; lying about the borrower's income, assets, employment or credit-worthiness; making false statements about who will be living in the property; or not disclosing rebates to the real estate agent, mortgage banker, broker, etc. Who Is Involved?
People involved with this kind of crime can include anyone looking for a fast and easy profit: unethical loan officers, deceptive sellers, brokers pushing risky sales just to get their commissions, and builders desperate to unload their inventory, among others. The victims are often senior citizens, first-time home buyers and other people who might be easily confused by the mortgage process that can be complicated. How to Avoid Mortgage Fraud
If anyone who's involved in your home buying process, whether it's the mortgage banker, the real estate agent, the appraiser or whomever, should not be asking you to falsify any information. If they are and you feel uncomfortable with it, don't be persuaded to do it. If you do, you can't claim that you didn't know you were doing it or that you didn't know what you were doing. It's wise to talk to your friends and family and ask what real estate agent they would recommend when you're buying a new home. Interview several agents and check their references. And whether you're buying or refinancing, the same goes with your mortgage lender and banker. Before signing your closing documents, you may want to have them reviewed by a lawyer and beware of false appraisals. In summary, mortgage fraud is illegal and it is a federal crime. Don't lie or allow anyone to persuade you to falsify anything on your mortgage application. Deal only with reputable individuals and/or companies that you know you can trust because the risk of penalty for committing mortgage fraud is not worth it.
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