Beware of Fraud

The real estate market helps a lot of businessmen to generate good business. But this boom in the real estate market has come with a price. Every now and then, various cases of fraudulent mortgage and other fake real estate related proposals get exposed. But who are the perpetrators? Well, they range from mortgage brokers to drug dealers and other people involved in frauds. Every year, many people fall prey to the fake schemes of these cunning perpetrators, who pick not only on the investors or legitimate lenders, but at times they target even low-income families. When investigations are carried out, every year hundreds of such cases are caught. The Internal Revenue Service or IRS for short plays a key role in bringing the culprits to justice. IRS investigations reveal that most frauds use the method of money laundering so that the governments don’t get to know about their income. The most common methods used by the perpetrators, as seen by the IRS include the following. Property Flipping: Property flipping means buying a real estate for a lower price, and reselling it as soon as the market is booming, for a much higher price. Although the practice of flipping or reselling is legal in the real estate business, frauds try to come up with false statements given to the lender. This renders the practice illegal. False Settlement Statement In this case, an original settlement statement is issued to the seller, providing accurate and real information regarding the deal, but on the other hand, a fake settlement statement is also made in which a highly exaggerated made-up selling price is stated. Like this, the lender has to pay an amount in excess to the original worth of the property which is enjoyed by the offenders involved. Falsified Credentials Deals are made with buyers who are not eligible to get into the deal. This is done by creating employment and credit history of the said buyers. People who are involved into the real estate business, as well as the new-comers in this business must be careful of such cases of fraud otherwise this can create a lot of damage.