Top 3 Mortgage Fraud Schemes to Watch Out For
By Kevin Sandridge
Recently, the Mortgage Banker's Association released a report that echoed findings by the Mortgage Asset Research Institute describing three of the most recent mortgage fraud schemes rising in the ranks in terms of popularity. Know what these are and watch for them.
1. Foreclosure Prevention Schemes
Foreclosure prevention schemes typically involve some sort of self-proclaimed foreclosure specialist who promises to help you keep your home - seemingly out of the kindness of their heart. These"foreclosure specialists" contact homeowners at risk of foreclosure and promise to work out their mortgage loan problems - sometimes by buying your home and allowing you to live there as a tenant. What happens more often than not - however - is that this type of scam ends up with the company buying your home and then selling int out from under you. They may allow you to stay in the property and pay your agreed rental amount, but it is very likely that they'll be negotiating the sale of the home at the same time. Once the home sells, you can be evicted, with the fraudulent individual leaving town and moving on to their next opportunity.
2. Fraud Against Immigrants and the Elderly
Elderly and Immigrant fraud is, unfortunately regaining popularity. Once prominent forms of fraud, these practices are rising again. What happens is this: consumers who are elderly or have limited English-speaking capabilities fall victim to fraudulent individuals who use them as "straw buyers" or create fraudulent loan transactions using their information. Sometimes elderly or immigrant renters are asked to sign documents that are actually forms that open up access for these folks to inquire about or post as those in control of your credit.
3. Builder Bail-Out Scams
Builder bail-out scams consist of a fraudulent individual who collects money from you for say - condominium conversion - with no plans for the work to be completed. The scams involve a host of purchases from potential investors using false identities on fraudulent loan transactions. Investors are shown convincing photos and mock ups and are allowed to tour converted units used as models - reassured that their conversion will look the same. However, as soon as the contracts are signed, and money is given over to the contractor, work on the conversion stops - with investors and lenders being left with incomplete and, in some cases, unlivable dilapidated buildings.
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