Real Estate Scams You Need to Know About

An entire community can be damaged by mortgage fraud. The crimes are often complex, involving several parties and occurring over multiple transactions. To protect you and your clients, educate yourself about mortgage fraud and be on guard for any warning signs in a transaction. You can start by reviewing these scams:

1. Illegal Property Flipping

This entails purchasing properties and reselling them at inflated prices. These scams usually involve faulty appraisals and inaccurate loan documents. The property is then refinanced or resold immediately after purchase for an inflated value. The home is purchased at a higher price, often by straw buyers working with the “flipper,” and eventually falls into foreclosure.

2. The Foreclosure Rescue Scheme

“Rescuers” promise cash-strapped homeowners that they can save their home from foreclosure. The rescue, which involves paying upfront fees, can take multiple forms, such as the perpetrator obtaining a new loan on behalf of the owner or by having the owner sign over the home’s deed and then rent the home until they can repurchase it. Eventually, the homeowner loses the home, either to foreclosure or the fictitious rescue company.

3. Loan Documentation Fraud

This fraud involves numerous schemes in which a borrower provides inaccurate financial information — such as about their income, assets, and liabilities — or employment status in order to qualify for a loan with lower rates and more favourable terms. Occupancy fraud is one growing area: Borrowers say they plan to live in the property when they actually intend to rent it.

4. Appraisal Fraud

A faulty appraisal — saying a property is worth more than what it really is — is connected to many types of mortgage fraud. It entails manipulating or overstating comparables, market values, or property characteristics in order to obtain a higher appraisal.

Talk to a knowledgeable Transaction Coordinator today! For your Transaction Coordination needs, Reach us via: Email: tacha@desiredrealestateservices.com Call us: 407-801-2634 Check out our website: http://www.desiredrealestateservices.com/