You may be hearing this for the first time but mortgage fraud is so common that you need to be EXTREMELY careful before signing any contract. There are two kinds of mortgage frauds; one by the seller and the other by the buyer. Mortgage fraud, by the seller, occurs by getting signed a contract through fraudulent mortgage lenders or mortgage brokers. The buyer might think they are getting the best deal and would want to sign the contract right away but in reality they are minutes away from getting into a major financial crisis. Be careful, ask questions and look into the company’s history. But just because a company is a pioneer in its field, it does not mean that it is not likely to commit fraud. In fact, the older the company, the more they are aware of the tricks of the trade; hence resulting into more instances of mortgage fraud.

The scheming seller

Fake mortgage brokers or lenders will present a very attractive interest rate and have the couple quickly sign the mortgage application. Usually the mortgage brokers will try and compensate themselves through selling the austin home mortgage at a higher value than the actual price of the home.  These brokers will offer you low interest rates and many other attractive benefits but keep in mind that whenever a situation seems too good to be true, it is most likely to be a scam. Most scams occur when the value of properties have increased in the market. This way, mortgage brokers can tell their customers the increase in value of the house is due to the boom in the market and at the same time maximize their own profits.

These con-artists will take advantage of a situation when they know a client is under pressure to either sell his house (could be due to foreclosure), are financially illiterate (usually young couples) or to people having trouble paying off their current mortgage. Any attempt of mortgage fraud is a serious crime.

The bogus buyer

Now it does not mean that a mortgage fraud is only attempted by a mortgage lender. It has in many cases switched around the other way to the customer. Lenders and brokers should be able to detect a phony client. Many customers, who intend to do fraud, provide false information due to lack of finances to pay off their mortgages or maybe because of previous mortgage loan rejections from banks or other lenders. Borrowers could provide all types of incorrect information like wrong SIN numbers, amount of income, name, address etc. So always verify all client information before approving any mortgage. But at times, it is difficult to verify some part of information. For example, a self-employed person could show to receive a higher income than they actually do.

Sometimes you might come across a sincere buyer who doesn’t know that some undisclosed information might result in mortgage fraud. For example, if a home buyer purchases a house and borrows money from the seller or any current austin mortgage loans on other property that is not disclosed in the contract then it’s a case of fraud.  Showing a higher priced false purchase contract to the mortgage lender is also an act of fraud. Another type of mortgage fraud is if the buyer wants to buy the property for investment purposes but claims he’s buying it to own to avoid high interest rates. If an appraiser overstates the value of a house or property for the buyer then it is also fraud. Whatever the case may be, mortgage fraud is a serious offence and has serious consequences. If you become aware of any type of mortgage fraud, report it to the FBI.