The dream of home ownership is one that many Americans share. However, some people are unable to secure property on their own due to financial constraints and other issues.
That is where mortgage fraud comes in, which is the act of providing falsified information or misrepresenting yourself during a real estate transaction. Here are a few common types of mortgage fraud and what they entail.
Most homeowners are willing to do whatever it takes to keep their properties when faced with foreclosure. Accordingly, they can fall victim to false promises regarding home ownership and their mortgage. Foreclosure fraud can entail transferring a property to another party for help, which the other party then uses to earn profits by renting it out or selling it.
When filling out applications for a mortgage, prospective homeowners must provide accurate information. If they intentionally provide inaccurate information to raise their chance of receiving funds, they have committed a form of housing fraud. For instance, listing more income or assets on a mortgage application constitutes mortgage fraud, as it can qualify you for a home loan you could not get otherwise.
A quitclaim deed is a legal document that allows the owner of a property to transfer ownership to another party in a truncated manner. With equity skimming, a buyer acting on behalf of another party will complete a mortgage application and file a quitclaim deed upon receiving the property. The other party involved will become the owner of the property and rent it out to earn a profit. However, they will not make mortgage payments, which means the lender will take back the property at some point.
All types of mortgage fraud can have very serious consequences. This is especially true as dollar amounts grow higher, as the person responsible for the fraud may face stiff fines and penalties.