Florida Mortgage Fraud: Protect Yourself
Despit attempts to combat it across the state and country, mortgage fraud is becoming an increasingly popular way to make a fast - and, of course, illegal - buck. It can put you at risk to lose thousands of dollars if you don’t know what to watch out for.
Typically, the home loan process involves several third parties, which means there is a propensity for individuals involved in the transaction to commit conspiracy. Among others, those parties can include: Florida mortgage brokers, appraisers, attorneys, title company employees, and investors.
Types of Mortgage Fraud
Inflated appraisals: The appraisal is artificially inflated to make the home seem like it is worth more than it actually is.
Foreclosure scams: Homeowners who are at risk of defaulting their loans or whose homes are in foreclosure are led to believe that someone can save their home in exchange for a deed transfer and up-front fees. The perpetrator will re-mortgage the property without actually saving the property from foreclosure.
Using false identity: A person’s identity and/or credit history is falsely used to apply for a Florida mortgage. This may be done with the person’s knowledge (who’s known as a “straw buyer”) or it may be a case of identity theft.
Equity skimming: An investor uses a straw buyer along with a false credit history and false income information to apply for a loan. After the loan closes, the “straw buyer” then signs the property over to the investor who then rents out the property (without making mortgage payments) until the property is foreclosed.
Property flipping: The act of buying a property, fixing it up and selling it at a profit. This is not an illegal act unless the acquisition of the property involved falsifying loan documents such as income information, appraisals, etc.
How to Protect Yourself
There are things you can do to protect yourself from becoming a victim of mortgage fraud:
- Make sure you receive referrals for real estate and Florida mortgage loan professionals from trusted friends and family.
- Find out what other homes in the area have sold for in comparison to the property you are looking at, as well as tax assessments to verify the property’s actual value.
- Make sure you understand everything you are signing. Don’t sign anything you aren’t comfortable with. If there is something you don’t understand, be sure to consult an attorney.
- Review all the loan documents to ensure all the information is accurate.
- Check the title history to find out how often the property has been sold and re-sold. It could be an indication the property’s value has been falsely inflated and the property illegally flipped.
- Don’t be pressured into borrowing more than you can afford to repay.
