Grant Trevithick discusses ways to catch mortgage fraud when selling or buying your home.

 

Grant here to discuss a very serious item... mortgage fraud. Mortgage fraud is a serious crime that can have a number of negative consequences for both borrowers and lenders. It is important to be aware of the most common ways that mortgage fraud is committed so that you can protect yourself from becoming a victim. Due the complexities of todays real estate market and the challenges the many people have been experiencing in both selling and buying a home it seems like the right time to remind everyone of these basic rules of the road. Here are the main ways that mortgage fraud is committed in all markets.

False Statements

One of the most common ways that mortgage fraud is committed is by making false or misleading statements on a mortgage application. This can include things like lying about your income, assets, or debts. For example, you might lie about your income in order to qualify for a larger loan, or you might lie about your debts in order to make it appear that you are more creditworthy than you actually are.

Omission

Another common way to commit mortgage fraud is by failing to disclose material information on a mortgage application. This could include things like a bankruptcy, foreclosure, or outstanding debts. For example, you might not disclose that you have recently filed for bankruptcy, or you might not disclose that you have a lien against your property.

Forgery

Mortgage fraud can also be committed by creating or altering documents in order to obtain a mortgage. This could include things like creating a fake pay stub, a fake tax return, or a fake appraisal. For example, you might create a fake pay stub in order to make it appear that you have a higher income than you actually do, or you might create a fake appraisal in order to inflate the value of your property.

Straw Buyers

Another common way to commit mortgage fraud is by using someone else's name and credit to obtain a mortgage. The straw buyer is typically someone who has good credit and income, but the actual borrower is someone who does not qualify for a mortgage on their own. For example, you might use your friend's name and credit to obtain a mortgage, even though you are the one who will be living in the property.

Appraisal Fraud

Appraisal fraud is committed by inflating the value of a property in order to obtain a larger mortgage loan. This can be done by colluding with an appraiser or by providing the appraiser with false information about the property. For example, you might collude with an appraiser to inflate the value of your property in order to obtain a larger mortgage loan.

Equity Skimming

Equity skimming is committed by using a mortgage to extract equity from a property without repaying the loan. This can be done by refinancing a property multiple times, taking out a home equity loan, or simply not making mortgage payments. For example, you might refinance your property multiple times in order to extract equity from it, even though you are not able to repay the loans.

Mortgage Fraud in Texas

In Texas, mortgage fraud is a serious crime that can result in fines, imprisonment, and other legal consequences. The state has a specific law, the Texas Mortgage Fraud Prevention Act, which prohibits anyone from knowingly making a false statement or misrepresenting any information in connection with a mortgage loan application. In addition, the Texas Department of Savings and Mortgage Lending oversees the mortgage industry in the state and has the power to investigate and penalize any individuals or companies found to be engaging in fraudulent activities. 

How to Protect Yourself from Mortgage Fraud

There are a few things that you can do to protect yourself from mortgage fraud. First, be sure to understand the terms of your mortgage agreement. Second, ask questions if you do not understand something. Third, be wary of anyone who promises you something that sounds too good to be true. Fourth, do not sign any documents that you do not understand. And fifth, if you think you may be a victim of mortgage fraud, contact your lender immediately.

Mortgage fraud is a serious crime, but it can be prevented. By being aware of the most common ways that mortgage fraud is committed, you can protect yourself from becoming a victim.

We at Owner Finance Homes make sure to review all statements regarding the selling of and the purchasing of one of our properties. Because we take this issue seriously we encourage all of our clients to review all documents and statements regarding their transaction with us. To see what properties we currently have for sale check out of web site at www.ofhdfw.com.