Mortgage Fraud

The Mortgage Fraud defines as when you dough or try to dough your Lender in any way that is   called Mortgage Fraud. This could be done either by giving fake documents about property or obtain larger loan than the value of property. Misrepresentation of contract deed is also came in Mortgage fraud shadow. The fraud can be revealed at any time, before contract or during the deed term. If the lender subsequently discovers any part of your loan application is false, not only can it demand immediate full payment of your loan, but you could pay heavy fines.

Mortgage Fraud

Different Kinds of Fraud

There are two basic kinds of mortgage fraud; one is for property and other is for profit.

  • In the first case, buyers lie on their applications to obtain a loan they might not otherwise have qualified for. By high fake income, for instance, they might manage to buy a more expensive house. By using cash back for a down payment, they may seem like buyers worthy of a lower interest rate.
  • Fraud for profit is more complex and more criminal. It normally involves a number of professionals who together conspire to inflate the price of a home.

There are also many other types of fraud are:

Property Flipping : it occurs when someone buys properties for cheap , gets it appraised much higher than it is worth and then sells them at price two-three times above the real property price.

Fictitious/Stolen Identity :

Mortgage Fraud2

Identity theft is one of the fastest-growing types of financial fraud. A fictitious/stolen identity may be used on the loan application. Borrower gives the name, personal information and credit history of someone else and actually uses it to apply for loans.

Foreclosure Schemes : it occurs when an individual or company misleads the homeowner into a “temporary” transfer of the deed to a third party with good credit. The third party then purchases the property and “leases” it back to the homeowner. The individual convinces the homeowners that they can “refinance” their home using the third party’s good credit. The homeowners are led to believe that they will pay “rent” on the home and once their credit is rehabilitated, they will get the title to their house back.  The homeowners then lose title to their homes.

Occupancy Fraud : This occurs where the borrower wishes to obtain a mortgage , but states on the loan application that the borrower will occupy the property as the primary residence or as a second home. If undetected, the borrower typically obtains a lower rate of interest than was warranted. Because lenders typically charge a higher interest rate for non-owner-occupied properties.

Falsifying deposits : Dishonest borrowers who do not have an earnest money deposit might state in the contract that the deposit was paid outside of loan,  which is fraudulent.

Protect Yourself From Mortgage Fraud :

In first instant make sure you get more than one opinion. Study the market and guard yourself with a minimum amount of knowledge. Avoid prepayment penalties and watch out for unusually large late fee payments. Specially understand any clause that allows the bank to request full payment immediately. Choose your broker carefully and Don’t lie on your paperwork.

United States` New Law: President of the United States Barack Obama signed a tough new law aimed at cracking down on the kinds of mortgage fraud and predatory lending that helped trigger the current financial crisis.

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