Mortgage Fraud
Criminal action taken to obtain a loan is a definition of mortgage fraud. There are a variety of actions taken to get a loan or an even larger loan than a borrower could qualify for. Federal courts will prosecute with prison terms up to thirty years. The fraud can be names in bank fraud, mail fraud, money laundering, and wire fraud. These criminal actions have risen over the past decade and states are now getting involved in this process.
There is also predatory lending that is a criminal offense. Predatory mortgage lending occurs when a lender misleads or deceives a customer. This can also be a part of mortgage fraud. Also included in the mortgage fraud realm are scams in short sales, loan modifications and foreclosure rescues.
There are specific items to watch out for in mortgage fraud. A consumer should be wary of the following list of items and circumstances.
Upfront fees for loan modifications or delinquent loans.
Pressured into signing paperwork that is not understood.
Fees for housing counseling services.
Always research chosen companies before hiring them for services. It is important to identify and report fraud to proper agencies.
The entire scope of mortgage fraud can include the following activities. Omissions or misrepresentation can occur in the following areas.
Appraisals that are inflated.
Stolen ID's and fictional persons
Chosen person to buy properties
False information in loan applications.
False loan documentation at application.
Kickbacks
Identify Six Warning Flags of Mortgage Fraud
The Loan Modification Scam Alert is a national public education campaign that has a list of six red flags to look for when dealing with fraud. Freddie Mac is the co-chair of this network. These include the following statements.
A company or representative may ask you for mortgage payments instead of sending payments to your mortgage company.
A company or representative guarantees loan modification or that they can stop foreclosure.
A company or representative asks for an upfront fee to work with your lender to refinance, reinstate or modify your mortgage.
A company or representative asks you to sign over the deed or sign paperwork that you do not understand.
A company or representative that makes a claim to offer an official government approved or official government loan modification.
A company or representative that asks you to release financial information over the phone that is not your lender or HUD approved agency.
Report all suspicious activity to your lender, government agency or the Federal Bureau of Investigation.
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