How to Avoid Mortgage Fraud
The process of buying or selling a house involves multiple entities and significant financial transactions, providing both the opportunity and motive for mortgage fraud. Consumers should be aware that it is a crime to provide false or inaccurate information when applying for a home loan. But some forms of mortgage fraud are committed without the buyer's participation and can result in substantial losses.
These include property flipping, the use of stolen identities for real estate purchases, equity skimming and fraudulent appraisals. Read about mortgage fraud in FindLaw's Criminal Law Center for more detailed information about these types of crimes.
There are some important steps you can take to avoid becoming the victim of mortgage fraud. The Federal Bureau of Investigation, which investigates fraud, suggests the following:
- Get Referrals: Make sure you know who you're dealing with when you decide to buy or sell a house. Get referrals for real estate and mortgage professionals and also check their state and local licenses.
- Do Research: Find out what other homes, particularly those of similar size and value, have sold for. Also check recent tax assessments of nearby homes.
- Stay Away from "No Money Down" Loans: These are usually gimmicks to get people to buy homes they can't afford. At best, these loans have very unfavorable interest rates and terms.
- Don't be Persuaded into Making False Statements: This includes real estate agents, mortgage brokers or anyone else involved in the transaction. Even a seemingly slight overstatement of income is considered fraudulent.
- Never Sign a Blank Document: There are no legitimate reasons for signing a blank document or one containing blank lines. Always make sure you read and understand what you are signing.
If you already own a home and are having financial difficulties, beware of unsolicited offers to help you reduce or eliminate your mortgage debt in exchange for an up-front fee. These are not legitimate services and you may end up in a deeper hole than before. Also, never agree to sign over the house deed "temporarily" as part of a scheme to avoid foreclosure. Chances are, you'll lose your house permanently.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.