Since the economic downfall in 2008, the news has been flooded with stories of Wall Street malfeasance. It wasn’t but five years ago the Lehman Brothers filed for bankruptcy, holding $600 billion in assets and playing a major role in the financial crisis. Since then stories of financial companies committing fraud have continued to unfold as consistently as a crashing wave, stripping people of their savings and robbing them of financial stability.
As defined by the FBI, mortgage fraud is “a material misstatement, misrepresentation, or omission relied on by an underwriter or lender to fund, purchase, or insure a loan. This type of fraud is usually defined as loan origination fraud. Mortgage fraud also includes schemes targeting consumers, such as foreclosure rescue, short sale, and loan modification.”
Mortgage fraud is one of the fastest growing crimes in the United States, with a total loss of over three billion dollars, and three thousand cases since 2007. It has continued to hurt homeowners, businesses and the national economy.
There are several different types of schemes that people have come up with over the years. Some of the most common include;
- Foreclosure Rescue Schemes: This is scheme preys on those who are facing foreclosure. A source will advertise different ways to relieve potential foreclosure, resulting in the owner being forced out of their home. They end up suffering a loss greater than having to foreclose anyway.
- Flipping: Flipping fraud is when people start lying about the improvements made on a home. The house is appraised at a much higher price and sold for much more than it’s worth.
- Appraisal Fraud: Appraisal fraud occurs when the house is knowingly appraised at a higher price that its actual value.
- Debt Elimination Schemes: Debt Elimination or Reduction schemes happen when a fraudulent third party advertises their “expertise” on how to reduce debt. Victims pay these people large amounts of money only to be taught how to file false documents that result in property loss.
So how do you avoid it?
When it comes to your mortgage it is important to follow a few simple steps to avoid falling victim to this crime.
- First, make your list and check it twice; be sure you get referrals for real estate and mortgage professionals.
- Second, make sure know what you’re signing. If there is any verbiage you don’t understand, seek a third-party to help discern any discrepancies. The Denman Team can walk you through any mortgage questions you have. It’s part of our Mortgage 101 service.
- Finally, do your own research. If an appraisal seems to high, find out the price of other homes in the area. If a home doesn’t appear to have the improvement listed, call an inspector.
This is why it’s important to work with someone with integrity, such as the Denman Team. We pride ourselves on working at the highest of ethical standards and providing “The Denman Difference,” treating each client with the respect and individual attention they deserve.