What are 4 types of mortgage fraud?

On Behalf of | Sep 23, 2021 | Fraud

Residents of New York who are buying or selling a home may want to learn more about the different types of mortgage fraud. Both lenders and borrowers may commit fraud, and there is fraud for profit and fraud for property. Below are four common ways that people might attempt to exploit a real estate transaction.

Equity skimming

An investor may make use of a straw buyer; this is someone who purchases the property on behalf of someone else. False credit reports and documents are the methods for the straw buyer to obtain a loan. They then use a quitclaim deed, giving up rights to the property, to pass the property to the investor.

At this point, the investor does not make any payments. Until the event of foreclosure, they rent out the property, receiving a profit from the income.

Flipping a property

It is not illegal to purchase and improve a property. However, people might buy the property below the market price. They then immediately sell it for a profit with the help of a shady appraiser, who inflates its value.

Foreclosure scams

Scammers take advantage of those who are on the verge of foreclosure. They convince these vulnerable people to put their property in the name of a third-party investor. The scammer then sells the property and steals the proceeds with the help of a fraudulent appraisal, committing bank and mortgage fraud.

Identity usage that is false

A scammer might use a false or stolen identity, giving the victim’s financial information to secure a property. Social Security numbers, false pay stubs, and more could help the scammer obtain a mortgage on a property they do not occupy or own.

Mortgage fraud and bank fraud have many forms, and they are all illegal. Individuals who commit fraud on purpose or even by accident may face criminal penalties.