Watch Out: How to Avoid Mortgage Fraud!
CMS Mortgage Solutions Inc.
CMS Mortgage Solutions Inc.
Published on March 11, 2023
Watch Out: How to Avoid Mortgage Fraud!

Watch Out: How to Avoid Mortgage Fraud!

Buying a home is an exciting experience and for many, it's the biggest purchase they'll ever make. Unfortunately, fraudsters are always looking for ways to take advantage of unsuspecting home buyers. Mortgage fraud can be costly and damaging to those who fall victim to it, so understanding how fraudsters operate and being aware of any potential red flags is essential when buying a home. This article will provide readers with a guide on how to spot mortgage fraud and protect themselves from becoming victims. Topics covered include details on various fraud schemes used by criminals, warning signs that should be looked out for, as well as steps that can be taken to ensure you don’t become a target of fraudsters. With this information in hand, readers can feel more confident making informed decisions when purchasing their next home.

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– What is Mortgage Fraud?

Mortgage fraud is a criminal activity in which fraudsters attempt to defraud lenders or borrowers by providing false information or documents. This fraud can be committed by lenders, buyers, real estate agents, mortgage brokers and even appraisers. The most common fraud schemes include:

• Overstating income on loan applications to qualify for a larger loan amount;

• Providing false employment records or W2 forms;

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• Fabricating bank information or asset statements;

• Appraisal fraud such as inflating the value of a property; and

• Bait-and-switch fraud where the buyer signs up for one type of loan but gets another with higher fees.

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– Warning Signs to Look Out For

Knowing what warning signs to look out for is the first step in protecting yourself from fraud. Some of the most common fraud indicators include:

• Pressures or incentives to lie on loan applications;

• Requests for large deposits up front without any explanation;

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• Offers for no money down loans;

• Unusually high commissions or broker fees; and

• Promises of guaranteed loans regardless of credit history.

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If you encounter any of these red flags during your mortgage process, it's important to proceed with caution and contact a qualified real estate attorney before entering into any agreements.

– How to Protect Yourself From Mortgage Fraud

It's important to remember that fraudsters are always looking for ways to take advantage of unsuspecting home buyers. In order to protect yourself, there are several steps you should take when buying a home:

• Get pre-approval from at least three different lenders;

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• Verify the identity and license information of any agents or professionals you work with;

• Contact reliable sources such as credit bureaus and banks to verify income and asset information;

• Obtain independent appraisals for any property you purchase; and

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• Use a qualified real estate attorney who is familiar with fraud laws in your state.

By following these tips, you can help protect yourself from mortgage fraud and ensure your home buying experience is as stress-free and successful as possible.

By understanding how fraudsters operate and being aware of common red flags, you can protect yourself from becoming a victim of fraud when buying a home. Educating yourself on fraud schemes, looking out for warning signs, and taking the necessary precautions should help make sure you get the best deal when purchasing your next property. Remember, fraud prevention is everyone's responsibility; so stay informed and take all steps necessary to ensure your safety when entering into any real estate agreements.

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CMS Mortgage Solutions Inc.
CMS Mortgage Solutions Inc. Virginia Beach
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(757) 558-2603