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What You Need To Know About Mortgage Fraud

Purchasing a home is stressful enough without having to contend with concerns about fraud. When it comes to residential real estate transactions, the focus is typically on affordability, location, and the real estate market. Would-be buyers rarely stop to think about criminal complications.

Unfortunately, fraudsters prey on unsuspecting victims, making awareness and vigilance critical. Understanding the types of mortgage fraud and how to recognize them is a key step in protecting your most important assets.

Mortgage Fraud For Housing

Mortgage fraud for housing is committed by buyers who knowingly provide false or dishonest information on their loan application. Exaggerating income and minimizing existing debt are both examples of misleading loan information. By falsifying the application, prospective buyers increase their chance of getting a larger loan or better interest rate.

Mortgage Fraud For Profit

There are several ways that mortgage fraud for profit can present itself, one of them being the presence of a straw buyer. Straw buyers are individuals who apply for a mortgage and purchase a home on behalf of another buyer who is often ineligible or poorly qualified for a loan.

In some cases, a person may unknowingly become a straw buyer as a result of identity theft. This is especially dangerous because if the real buyer either defaults on the mortgage or simply takes the money and leaves, the straw buyer will be left responsible for the payments.

Mortgage Fraud For Title

Mortgage fraud for title is a crime with catastrophic consequences. It occurs when a criminal steals an individual’s identity and takes out a mortgage in their name. This can happen with a new loan or in addition to an existing mortgage. In instances of mortgage for title fraud, the victim is saddled with significant debt that they did not incur.

How To Protect Yourself

Protecting yourself against mortgage fraud requires education and regular check-ins. Given the risk of identity fraud due in part to our digitally-driven world, individuals should make a habit of checking their credit scores to ensure that no suspicious activity is taking place. Homeowners must also confirm that their home title is in the right name.

Becoming the victim of mortgage fraud can result in a long, stressful, and expensive battle. Taking the time to consult with an experienced residential real estate lawyer before beginning the home-buying process can provide invaluable guidance and peace of mind.

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