Mortgage Fraud Primer
Did you know that Mortgage Fraud is one of the fastest growing crimes in the United States? And while many fraud schemes do not involve unknowing homeowners, understanding mortgage fraud will help protect you from the possibility of being entangled in one. Below are three common types of mortgage fraud you should be aware of.
Fraud for Housing
Commonly known as as fraud for property, this type of scheme is primarily committed by borrowers. Schemes such as these usually use a borrower to provide misleading information about employment, income or assets in order to qualify for a mortgage. A borrower, wanting to purchase a property that they know they cannot afford, may falsify assets in the mortgage application documents to qualify for a larger loan amount.
Fraud for Profit
This is sometimes called “insider fraud,” and it is the most common type of mortgage fraud. These schemes often involve a group of people who play numerous roles in the plan. The main beneficiaries of this type of fraud are usually its architects, while others are paid a fee for their part in the scheme. For example, a mortgage broker may partner with a loan processor to create a fictitious credit profile and collude with an appraiser to inflate the property value.
Predatory Lending Fraud
This is the type of fraud that has the greatest effect on homebuyers and includes any number of bait and switch scams where a lender buries bad loan terms in paperwork, fooling the buyer into signing the paperwork then inflating payments and interest. The best way to avoid get caught up in any type of mortgage fraud is to use an honest, reliable and highly credentialed mortgage banker. This will virtually guarantee you a safe and fair transaction.
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Lynx Mortgage Bank LLC NMLS #5838 143 Post Avenue, Westbury, Ny 11590 (877)599-LYNX (5969) Licensed Mortgage Banker: NYS Department of Financial services