Mortgage fraud can be easily avoided

Mortgage fraud is a growing problem throughout the United States. While the problem seems to be greatest in the West and in the Southeast, the incidence of mortgage fraud is increasing everywhere. It can be hard to detect, as the crime is often conducted by a number of insiders in the lending industry who are working in concert and splitting the proceeds. But other fraud involves a number of outsiders working together, often with the “help” of an unwitting victim who ends up with the debt. 

As the authorities look more closely into the insider deals, the outside deals will become more prevalent. That increases the likelihood that you may become a victim. 

Here are some suggestions for how you can avoid being victimized by perpetrators of mortgage fraud, as recommended by the Illinois Banker’s Association:

• Know what you are signing. You are legally responsible for the documents that you sign and the legal ramifications of the contents. If you do not understand what is on the contract, get help. In fact, hiring an attorney for any real estate transaction would be a great idea. Buying real estate is the most expensive thing most people will ever do. The few hundred dollars spent on an attorney may turn out to be money well spent if it prevents future problems.
• Ask ahead of time for an estimate of your closing costs. If the final costs are out of line with what you were expecting, ask about it before yo sign the documents. Again, once you sign, you are responsible, even if the lender has padded the contract with added fees.

• Do not provide fraudulent information when applying for a home loan. This particularly applies to your income. And do not sign any loan documents that you know contain false information.  This applies to income, appraisals or any other financial information.
• Do not agree to lend the use of your name or personal information to allow someone else to buy property in exchange for pay. You may find yourself stuck with a mortgage that you knew nothing about.
• Make sure that you ask for, and receive, copies of all documentation associated with the loan.
• If someone offers to pay you to purchase a home or to participate in purchasing a home, decline the offer. Again, many scams involve the participation of third parties with good credit who think that they are just temporarily participating. In the end, you will end up with a loan that you do not want.

Most of these items on this list are fairly straightforward. It only stands to reason that if someone is asking you to lie on a mortgage application or worse, paying you to lie on a mortgage application that they are up to something illegal. If it is illegal, you could find yourself going to jail, even if you were not in on the creation of the fraud. The law tends to view all participants as equally guilty.

Mortgage fraud is a growing problem that costs an estimated $1 billion per year. This money ultimately comes out of the pockets of other, honest, homeowners. The only way to stop the proliferation of this crime is to refuse to participate in it.