However, they don't actually make the mortgage payments and you may end up going into foreclosure anyway. Begin typing to search, use arrow keys to navigate, use enter to select, Please enter a legal issue and/or a location. Identity theft is a particularly threatening form of mortgage fraud, as it tends to lead directly toward homeowner financial loss. Mortgage fraud is a a serious crime that can lead to hefty fines and prosecution.
Find out more. Or, the fraudster could take out a second mortgage using the homeowner's stolen data information, and escape with the cash, once again leaving the debt to the homeowner. Never sign a mortgage loan document that is either blank, has blank lines, or contains questionable or unfamiliar data. For example, a home buyer, mortgage broker and/or other real estate professional who submits fake W-2 forms or procures an inflated property appraisal has engaged in mortgage fraud. Those accused of committing mortgage fraud may also be held liable for monetary damages incurred by the lender. If you believe your mortgage loan account has been breached via identity theft, take these three steps: Make sure to contact your mortgage lender or financial institution immediately so they flag any potential mortgage fraud or identity theft as soon as possible.
After the home is sold, the deed to the property may be shifted over to the intended owner. You want to avoid being either a perpetrator or a victim. What we collectively refer to as mortgage fraud includes various illegal schemes involving some type of misrepresentation or misstatement on mortgage documents. If you're unsure about the credibility of a mortgage broker or real estate agent you're using, check with your local Better Business Bureau to make sure there's been no problems reported with your lending partner. Experian and the Experian trademarks used herein are trademarks or registered trademarks of Experian and its affiliates. Don't work with anyone who pushes you to fudge facts or asks you to sign blank or incomplete paperwork. These loans may or may not fall into the "fraudulent category," depending on state-by-state mortgage loan statutes, but they may get you a loan with high interest rates that could increase over time, and high mortgage fees that only add to your mortgage loan debt burden. How to Pick the Right Credit Card for You.
For example, if an identity thief steals a homeowner's Social Security number, or intercepts the mortgage account number, he or she can use that information to take out a home equity line of credit (also known as a HELOC) worth tens of thousands of dollars, in the homeowner's name. The straw buyer typically has better credit than the homebuyer, likely has higher income and lower debt, and stands a much stronger chance of getting approved for a home loan than the intended homeowner. It's several hundred dollars, but better that than a house with thousands (or hundreds of thousands) less than you expected. Mortgage fraud is a serious offense and can lead to prosecution and jail time for convicted offenders.
Sometimes, applicants report false income information to get a bigger loan or a better deal.
The cash is sent to a fraudulent account established by the thief, and the homeowner is left holding the bill. Offer pros and cons are determined by our editorial team, based on independent research. The cash gift usually helps the buyer make a down payment, potentially covering up some serious financial issues.
That's an immediate red flag to avoid working with that person or firm. While any form of mortgage fraud is a serious offense, losing one's data to identity thieves can trigger a financial loss that's difficult to overcome, and that could take years to clear.
Also known as foreclosure scams or foreclosure rescue schemes, this kind of fraud is unfortunately very common and can cost consumers a lot of money.
Talk to a local attorney to find out more details about the laws in your state, including ways to avoid being a victim of this crime. Firefox, or Beware of sellers who try to force you to use their lender, agent or appraiser. Why Your Mortgage Lender Might Cancel Your Application, When you can only complete a deal if everyone involved doesn't know pertinent details, it's probably fraudulent, If you misrepresent data the lender requests, or "forget" to provide information you know matters, you may be committing fraud, If a lender pushes you out of your comfort zone or asks you to sign blank forms, there may be fraud involved. Connect with friends faster than ever with the new Facebook app. Inflating a property's value, overstating your income on a loan application, or colluding with another investor to buy property are all vigorously investigated and punished. Some criminals may find potential victims by reviewing publicly available foreclosure notices. Civil claims may be based on contractual theories, misrepresentation and/or deceit, conspiracy to defraud the lender or breach of trust. If you're paying cash, getting seller financing or being pushed to use a specific lender or appraiser, get your own evaluation. Third parties involved in the fraudulent transaction, such as mortgage brokers or appraisers,may also be liable for damages. Some mortgage applicants claim that they plan to use the subject property as a primary residence when their true intention is to rent it out.
A fraud alert stays on your credit report for 90 days, which should give you enough time to close any compromised accounts, open new ones, and go through the proper channels to rectify the damage.
This type of fraud is typically when a borrower or potential homebuyer is motivated to acquire or maintain ownership of a house. It's important to be careful throughout the entire homebuying or selling process.
Experian does not support Internet Explorer versions 10.0 and below. You may want to purchase an owner's policy as well. There may be an appraisal fraud in there as well. Don't give your private information to any lender until you decide to apply. Mortgage fraud occurs when a potential homebuyer, seller, or lender lies or omits key information that leads to a mortgage loan approval or terms that the applicant wouldn't normally qualify to receive.