This would probably be our shortest, most succinct, and truly direct-to-the-point blog post since we started providing you with informative posts and thought-provoking insights a couple of years back.
Our topic is closest to your heart and most serious to take for granted because this afflicts everyone – you, me, and the greater majority of people – who at one time fell prey to con artists and scammers.
Fraud has been pestering us for the greater part of our lives since emerging from our mothers’ wombs. We have been exposed to this “dissociative plague” through a variety of sources: false advertisements, dubious claims, unbelievable circumstances, hoaxes, and others that led us wandering in regret land after recovering our senses and learning that we had been taken for a ride!
Many types of fraud exist and one of the most troublesome is mortgage fraud. In this day and age of technology and virtual businesses, the internet has become a broad and endless ocean of scammers and fraudsters whose main intention is to hurt people – like you – and turn them into screaming zombies: mindless individuals who shriek in dismay AFTER discovering the truth behind the falsehood.
This post is addressed to everyone but more particularly to first-time home buyers and current homeowners since you are most susceptible to fraud. Fraudsters will be making use of your excitement and they will not stop at anything to make dreary fools out of all of you.
Unless you are as witty as Batman™ or as cognitive as Doctor Strange™, your only recourse is to pay real close attention to your instincts and learn to discern right from wrong.
If you’re ready to combat fraud then the bullets fly and let’s go…
Mortgage Fraud Definition
In its simplest and most concise meaning, mortgage fraud is the act of misrepresentation and deception. One perpetrator will purposely misrepresent information to deceive another individual (read: the unwilling victim).
This can be avoided if you will practice foresight and are always well informed of current trends most especially when applying mortgage for the first time.
Areas of Fraud in Mortgage
Surprisingly, there are two areas of interest in mortgage fraud: (1) profit fraud and (2) housing fraud.
Profit fraud happens when unscrupulous individuals make use of the mortgage contract NOT to secure you a house but to STEAL your money and equity.
Take note, too, that lenders can fall victims as well to this fraud type since there are circumstances that a third party (in this unfortunate case, the fraudster) is needed as a “bridge” between you (home buyer/borrower) and the lender (the creditor) to consummate the deal.
Housing fraud, on the other hand, is worse than profit frauds this involves the homeowner and another individual in cahoots with the former (i.e. an appraiser).
The former will misrepresent the financial details on a loan deal or even invite an “appraiser” to manipulate (i.e. bring down) the appraised value of the house.
This is considered downright illegal because the purpose presented here is the forced acquisition or ownership of the property without the lender being conscious about it.
Regardless of who is behind the fraud, it is considered a crime.
Technology, like any kind of trend, is now being used as a vehicle by these conscience-lacking individuals making “honest” mortgage brokers online look unreliable and this will hurt their reputation in the long run.
Practice diligence when dealing with so-called respectable mortgage advisors or lenders on the internet.
Do your research before committing your money and your future with these questionable individuals.
Other Types of Mortgage Fraud
1. Property Flipping – this is committed by purchasing a house, fixing it, and then selling it at a profit. Not all property flippers are fraudsters; however, it pays to be vigilant when dealing with people like these. Approach a reputable mortgage real estate advisor for the best courses of action to take when faced with this eventuality.
2. Occupancy Fraud – this crime is perpetrated by a con artist (i.e. a borrower) claiming that the property is soon getting occupied or habituated. This is purposely done to acquire satisfactory bank status without the bank knowing that the house is NOT GOING TO BE OCCUPIED ANYTIME SOON. The perks enjoyed by the scammer using this fraudulent transaction are lower mortgage rates and lower out-of-pocket costs, to name a few.
3. Straw Buyer Fraud – this con is utilized by a perpetrator by allowing someone to use THEIR OWN identity, credit score, and income – among others – and passing this information to any lender or mortgage agency and ALLOW another buyer who MAY NOT BE QUALIFIED to purchase a house. This one is voluntary since the fraudster is committing this on his/her own volition: nobody is forcing him/her to do this atrocious act.
4. Identity Theft – this is probably the worst type of fraud ever to surface since using the internet in conducting businesses on a global scale. This crime is instigated by an individual who uses – STEALS – vital information from UNWILLING VICTIMS.
5. Income/Asset Falsification – this is done in consonance with identity theft and involves the manipulation of bank records and even personal data like Social Security Number, Tax Returns, and even employment verification correspondences.
Professional Mortgage Loan Fraud
As if this list is not enough, we still have two types of professional mortgage fraud that are committed: (1) Air Loan and (2) Appraisal Fraud.
Air loan is committed by simply acquiring a non-existent property for an equally non-existent borrower.
What happens next is a sure candidate for Ripley’s Believe It or Not!™ show: the poser will inform the unsuspecting lender about an alleged buyer of an alleged property. Afterward – meaning all of the necessary vouching is done to verify the “truthfulness” of the transaction and passed all criteria – the lender will proceed in providing the loanable amount to the scammer.
Once this is consummated, the perpetrator vanishes a la David Copperfield™ along with the borrowed – read: stolen – money.
Poof!
Ain’t this nifty, huh?
How this fraud escapes most mortgage experts is totally beyond us.
Appraisal fraud, on the other hand, is more of a group-oriented scam involving four main personalities; namely, a real estate agent, a builder, an appraiser, and a loan officer, respectively.
These individuals, to our mind, are the greatest worst infamous fraudulent “pop-group” of today’s putrid selection of scammers and con-artists. They try and make their shameless act appear grand for their version of perverted glory by destroying other people’s lives and dreams.
They are all in when doing their dastardly work: they will maximize any purchase price as well as swell up any loan amount for the sole purpose of increasing their commissions.
Fantastic! Wow! Really…!
(If you ever wondered how a poorly performing real estate agent ends up with the most beautiful condominium unit in the community then now you know. Hah!)
Generally speaking, despite the insertion of humor in the last section of our blog, these fraudsters are a menace to society. They disenfranchise anyone – be it a borrower or a lender – without giving any thought to how their actions will affect them.
First-time home buyers are most likely to fall victims to fraudsters because they know less about the whole mortgage contract game.
Much worse, if and when they become prey to these heartless and conscience-deprived individuals, they end up losing money and would bid, instead, for a loan from bad credit mortgage brokers who may or may not even be that trustworthy, to say the least.
There are still ways to fight back, though. Agencies like MBA (Mortgage Bankers Association) and NAMB (National Association of Mortgage Brokers) are your lifelines to assistance and guidance against mortgage fraud. You also have the Economic Crimes Unit – which is under the FBI – that monitors complaints and suspicious activities within the mortgage sector.
Final Thoughts
Fraud exists everywhere. You have to be certain that your transactions, most especially those that are mortgage-related, are handled by a reputable mortgage professional.
Do not be swayed by flowery words and empty promises from people who appear and sound “too good to be true”. Rely instead on your intellect and do your research diligently.
Be faithful in the proper mortgaging process because this is the only way that you can be assured of a long-lasting and harmonious relationship with yourself, your lender, and with your life for years to come.
If you encounter any fraudster or have been victimized by one then don’t hesitate to contact your local police or any federal-government anti-fraud unit for immediate assistance.
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We are your best mortgage solutions provider in Canada founded by Faizal Garasia in 2019. We have a network to more than 90 lenders including the largest banks, credit unions, trust firms, and financial institutions across Canada.
Contact us at (416) 825 0142 or send an email to faizal.garasia@dominionlending.ca today for more information.