Mortgage Fraud is alive and well

Even though it is harder to get a loan than it used to be mortgage fraud is alive and well and depending upon who you listen to it is at an all time high even right here in Minnesota. . . and in St. Paul too.

Last week I attended a class for Realtors about mortgage fraud. It wasn’t a how to class it taught us what to look for. Sometimes real estate agents are involved in mortgage fraud and they don’t even know it. In other cases they orchestrate it.

Here are some basic tips on how to avoid fraud:

1. Get referrals for real estate and mortgage professionals when you want to buy or sell a home. And once you do, check out their licenses with state, county, or city regulatory agencies. Most of these people are exceedingly honest and above-board—it’s just a small percentage who have given the overall profession a black eye.
2. Do your own research into what other homes in the neighborhood have sold for. Also, look into recent tax assessments of neighborhood homes.
Beware of “no money down” loans. These are a gimmick used to entice people to buy a home they really can’t afford.
3. Don’t let anyone (i.e., a realtor, mortgage broker) talk you into making a false statement on your loan application, like overstating your income or lying about where your down payment is coming from.
4. Never sign a blank document or a document containing blank lines. Be sure to read and review all loan documents signed at closing. If you don’t understand what you’re signing, get an attorney who can review the documents for you.

There are people who want to buy homes very badly and there are real estate and mortgage professionals who need business very badly. This isn’t always a good mix. Real estate agents are taught to find a loan that will work and that everyone should be able to buy a home. Truth is not everyone can or should buy a home.

Mortgage fraud is thriving in our current economy and housing market. There are refinancing scams and foreclosure rescue scams that take advantage of those who would do anything to save their homes.

There are property flipping schemes and short sale schemes too.

One of the things I like to tell my clients it that if it seems too good to be true or too easy there is probably something wrong. If something doesn’t seem right or feel right it probably isn’t.

There is almost always a title company involved when there is fraud. Sometimes they need to overlook a few things for a fraudulent closing to work.

Here are some excellent resources for learning more about real estate and foreclosure fraud.

The FBI web site – Mortgage Fraud

The Minnesota Attorney General’s web site – Fraud

Both of these sites have places where people can submit information or complaints which is nice because fraud can runin lives and the people who profit from it should be behind bars.

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