How Can You Successfully Avoid Mortgage Fraud?

There are many pertinent issues today that surround the real estate industry. But among these problems, the reported cases of fraudulent mortgage applications and transactions seem to be the most alarming. Despite the efforts of various public and private agencies to address this problem, there are still abusive individuals who deceive borrowers who are already in apparent financial hardship. If your home selling or buying effort is hindered by deficient financing, be careful in dealing with other people who promise to solve your mortgage loan problems.

The Federal Bureau of Investigation recently reported that about 80% of filed fraud cases were due to collaboration of the mortgage key players and either the home buyer or seller. There have been cases where the fraud is committed to gain profit. This occurs when the mortgage broker, loan processor, appraiser and seller forge a covert alliance to deceive a prospective buyer or mortgage lender. These conspirators conjure up ways to file fictitious or false credit profiles (for the seller) and justify the inflated property value. As a result, the mortgage loan can come out higher in amount. The excess would then be split among the involved willing participants.

As for the cases involving the home buyers, fraud is committed so as the borrower can ask for a loan to purchase a home he cannot actually afford. Fraud for property or housing is usually a scheme between the borrower and a mortgage industry insider. They file falsified documents, which aim to fit the lender's requirements for loan qualification. These documents may include about the borrower's employment, income status or roster of assets.

Regardless whether the fraud is for acquiring profit or for home ownership, the act itself is illegal and punishable by law. Mortgage fraud is a federal crime that confronts proven guilty parties with jail time and remuneration for damages. The reported cases have pushed lenders to implement more stringent qualification standards and deliberation processes. Thus, it is now relatively easier to distinguish deceitful claims. You must then be always vigilant that you are not willingly or unknowingly entering a fraudulent transaction.

If you are the seller, take note of the following:
- prioritization of getting assistance from certified and recognized mortgage professionals and agents
- careful evaluation of offers from buyers, especially those that are way higher than your asking price - there have been sellers who were victimized by seemingly high buyer offers, which later on would be found out to come with concealed conditional terms like requiring the seller to refund the difference after the closing
- vigilance whenever seeking assistance from loan modification agents - never pay upfront fees before the agent can render his service

If you are the buyer, here are the fine points you should not miss:
- performance of in-depth evaluation of the seller's credibility - check if the seller owns the rights to owning the property for sale, by inquiring from the local recorder of deeds
- non-submission to arranging mortgage loan by a third party recommended by the seller - only deal with your own broker or lender

Whether as a seller or buyer, the ultimate thing you need to give full attention to is being thorough. Never sign any document that has not been under your deliberation. Always check if the contract contains inaccurate information or lacks details pertinent to your mortgage loan. Integrate these simple steps with the way you handle a transaction, and surely you are bailed out of being a part of something fraudulent.

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