Avoiding Mortgage Fraud

Published by julia | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous, Real Estate, Shout Outs

The US Federal Bureau of Investigations has revealed that mortgage fraud is currently among the rapidly rising white-collar crimes of the times. The number of mortgage fraud incidences is continuously rising not just in the United States, but also in other parts of the world.

That is because people now are starting to recognize the value of land properties as significant investments. Since 2001, worldwide statistics have shown that the volume of mortgage frauds have increased by more than four times.

And through the years, there are more and more people and home buyers who are being victimized by mortgage defrauders. If you are new in home buying, you must ensure that yourself is safeguarded from opportunists who are on the look to generate illegal money from you.

What is mortgage fraud?

Mortgage fraud is the transaction when someone, a broker, sells you a property or a home at very high prices. Usually, these brokers would promise and ensure that you that the tag price is reasonable because the return to investment in the area where the asset is located is very high.

Defrauders also often assure victims that the valuation of the property being sold would surely rise up in just little time. Thus, if you are into sound investment schemes, the idea could surely convince you.

So who is the usual victim of mortgage defrauders? Actually, anyone can fall as victims to the rat-traps of these anomalous people. However, you will be more subjected to the scheme if you are exposed and involved into home and property buying.

Surveys and industry analyses indicate that victims of recently reported mortgage frauds are usually senior citizens who are aiming to wisely use and grow their retirement money. Because these people are not employed anymore, their drive to generate more money through returns from investments are more high, making them more prone to fraudulent activities.

New homebuyers are also the usual victims of different mortgage frauds. If you are new to home buying, of course, you are not yet that familiar to the nitty gritty of mortgage transactions. That is why if defrauders find you, they would instantly device schemes to defraud you thousands to millions of dollars.

How is mortgage fraud committed?

Mortgage fraud is committed when the seller approaches a prospective home buyer offering a home or a property that has a very high price tag. Usually mortgage frauds’ prices are about three times to four times higher than the industry pricing average.

If the prices are high, then how do these people convince people to buy? Are the victims not alarmed by the very high prices?

If you are a homebuyer who treats homes more like investments, you know the value of properties based on the market factors and conditions in the environment where the asset is located. Thus, when you buy a home in Tennessee, for example, you know the reasonable price tag.

However, because of false hopes, the defrauders can convince you that the actual real estate value in the area is bullish and would easily rise in the future. If you succumb to the invitation, then you are trapped.

What about the high tag price? Well, the home seller would pretend to help you secure facilities for funding. Usually, they would refer you to a lender and would also offer to process the necessary papers for you. This is also a scheme that would boost the profits of these sellers. They could impose commissions on you for no reason at all.

Thus, after the transaction, you own the property, you are obliged to repay loan facilities, and you are left waiting for the valuation of the property to shoot up. All these while the home seller is taking a vacation in the Bahamas or indulging in different luxuries using the money collected from you.

In some instances, the value of the home really increases, but it would take time. That is if fortunes turn rosy. Otherwise, the buyer would find it hard to even break-even because the value of the property would surely not rise up in the short to middle term.

To avoid being  a victim to mortgage fraud, consult experts and authorities first before investing in homes and properties. Seek the help of a reliable and trustworthy appraiser and check the property if it has the potential to be priced higher in the future.