Beware of Mortgage Fraud And Scams: How To Protect Yourself During The Process
Beware of Mortgage Fraud And Scams: How To Protect Yourself During The Process
Ethical violations and criminal activity in numerous areas have harmed our economy in recent years, particularly in the banking, finance, and housing sectors. Mortgages provide an adequate chance for criminal actors to steal, swindle, or cut shortcuts when it comes to financial crimes. In its most basic form, fraud is intentional misrepresentation and deception: one party deceives another by misrepresenting information, facts, and numbers. So mortgage fraud is more than just predatory lending practices that prey on specific borrowers.
It is defined as any type of “material misstatement, misrepresentation, or omission relating to the property or potential mortgage relied on by an underwriter or lender to fund, purchase, or insure a loan.” Individual borrowers and commercial specialists can both commit mortgage fraud.
Mortgage Fraud Is Classified Into Two Types: Profit Fraud And Housing Fraud
The walls, ceilings, floors, structure, foundation, roof, and other visually accessible areas within and outside of the property will all be evaluated by the home inspector. The inspection report should consist of
Fraud For Profit:
Those who commit mortgage fraud for profit are frequently industry insiders who use their specialized expertise or power to commit or facilitate the crime For example, a home buyer may lie about their income or other assets on a Construction Mortgage Loan application in order to secure a fraudulent loan approval or better loan conditions.
Housing Fraud:
This fraud includes illegal measures taken by a borrower motivated to obtain or keep ownership of a home.
8 WAYS TO PROTECT YOURSELF FROM MORTGAGE FRAUD
An old proverb goes, “If it sounds too good to be true, it probably is.” The same advice could help British Columbians who are searching for a good deal on a mortgage and may be less than truthful on their mortgage applications or when negotiating with someone to acquire financing. People who intentionally conceal their financial information when applying for a mortgage commit mortgage fraud. Some of these lies could include inflating income or length of service at a specific job, lying about the amount of down payment or where that money is coming from, or utilizing a “straw buyer” on a mortgage application—someone with strong credit who agrees to be identified on a mortgage application.
Those who misrepresent their financial facts when applying for a mortgage commit mortgage fraud. Some of these lies could include inflating income or the length of time at a particular job, lying about the amount of down payment or where that money is coming from, or using a “straw buyer” on a mortgage application—someone with good credit who agrees to be named on a mortgage application in exchange for monetary compensation.
1. Be Honest
Buying a home requires a large financial commitment; an inspection gives you the confidence to proceed. It’s a significant decision that you should give careful thought to. The biggest advantage of conducting a pre-purchase inspection is that it enables you to learn more about the house and prevents any unpleasant future shocks. Having all the information is essential to ensuring that you are not misled by the home’s aesthetics during this challenging period, which is particularly relevant for first-time purchasers.
2. Understand The Expert You're Dealing With
Working with a licensed real estate expert and an authorized Mortgage Broker or lending institution is always a good idea. An authorized mortgage broker acts as your agent in finding a lender; they perform the mortgage purchase for you. A mortgage broker’s role is to assist you in locating the best mortgage rate, terms, and conditions for your specific circumstances.
3. Don't Spend Money Unless You're Buying Something
Never guarantee a loan or agree to be on a mortgage unless you are one of the buyers. This discloses your personal information, and you may even be held liable for the debt if something goes wrong. Once the buyer’s lender agrees that everything was properly done and initiated, they will authorize the title business to finalize the transaction and transfer funds once they receive the transaction documents. That is when the buyer can pick up his or her keys.
4. Read All Documents Carefully
When you buy and mortgage a home, you must sign a lot of paperwork. However, it is the final loan documents that bind you to the purchase and mortgage, so carefully review these. Never, ever sign anything without reading it. If you don’t understand something, ask. Skipping the fine print in any document could lead to problems later on.
5. Consult With A Legal Professional
The most crucial job of your lawyer in your mortgage transaction is to answer inquiries. They make certain that you understand your legal obligations before committing to a new mortgage or transferring your existing mortgage to a new property. Legal professionals can provide you with sound guidance on contract law, title insurance, and other ways to protect yourself.
6. Check The Sales History
Getting an appraisal on a property is also smart advice because an appraiser will know the history of the home. The sales history can help confirm all owners on title, which is important for your application submission. Other things to look out for are: Prices vary greatly. This could indicate that the property’s value has been deliberately boosted. Too many title changes in a short period of time could be a warning indicator.
7. The Down Payment
If you pay a deposit, make sure that you have trust in the seller’s real estate business, a notary, or a lawyer. Purchasing your first house may be one of the most complicated purchases you’ve ever undertaken. This is why it is essential to select a realtor and a Real Estate Attorney you like and trust.
8. Be Careful
Back off if anyone offers you the opportunity to generate quick money. It is not advantageous to mislead yourself while applying for a mortgage. Also, never agree to be added to a mortgage if you are not one of the buyers. If the buyer defaults, you may be required to pay. There is also the prospect of being held criminally accountable for any misrepresentations.
Conclusion:
Mortgage fraud is dangerous, unlawful, and frightening if you don’t know how to avoid it. As a homeowner, you may be a target for scammers or at risk of committing fraud yourself. As a reminder, we always recommend visiting a real estate attorney to check all legal documents before closing on a property to protect your own safety and success.
Alpha Mortgage House Corporation is a Mortgage Broker in Surrey, BC. We provide mortgages for Home Purchases, Project financing, Second mortgages, Commercial mortgages, Mortgages for first-time home buyers and more. Alpha Mortgage is a one-stop solution for all your mortgage needs. Our team works with top lenders to provide you with the best financial options.