Protect yourself from mortgage fraud

By Melissa Wirkus

Although the housing market is on the decline, mortgage fraud definitely is not. In fact, cases of mortgage fraud have been on the rise recently.

Mortgage fraud encompasses a wide variety of scams, including identity theft and dishonest lenders and brokers; the options for this type of fraud are endless.

With cases of mortgage fraud increasing, it is important to be aware and alert when completing a mortgage transaction, and know specific steps you can take to protect yourself against mortgage fraud.

An October 12, 2006 article by Gerri Willis of CNN, “Guard against mortgage fraud,” explains things people can do to protect themselves against a potential scammer.

The article explains that the two groups that are most vulnerable to mortgage fraud are senior and first-time homebuyers. Seniors are vulnerable because people think they can easily take advantage of them, and new homeowners are also vulnerable because they do not know the ins and outs of taking out a mortgage that a seasoned homeowner would know.

That is why it is also very important for people who are taking out a mortgage, especially for the first time, to educate themselves on the whole process.

“Mortgage fraud is one of the fastest growing white collar crimes, according to the FBI, with reports more than quadrupling since 2001.”

“Mortgage fraud refers to a whole host of scams, but the bottom line is that most cases involve inflating the value of a property for more than its worth, with the scammer pocketing the difference.”

First of all, be aware of the fact that it usually takes a lot of people to commit mortgage fraud – meaning multiple officials and agents are usually involved. The best thing you can do is keep an eye on the current market and have a semi-good idea of how much properties are selling for.

This will help to protect you against an appraiser who is valuing a property for way more than it is worth.

Since mortgage fraud typically involves corrupted people who are in the industry, it is important to be aware of some red flags that could clue you in that the person you are dealing with is trying to pull the wool over your eyes.

“Your broker insists you use a specific lender. The bottom line here is that a broker shouldn't care what lender you choose. That's your right.”

“Another red flag: Lenders who encourage you to borrow more than you can afford. You should have a clear handle on what your financial comfort zone is. You should also sound the alarm if you are not given copies of loan documents you sign. This is generally a routine practice.”

If you follow these important tips, you should be able to decrease your chances of getting scammed by a mortgage industry insider.

Just remember to never buy a property before you see it, and you should always hire your own appraiser.
Good Luck!

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