Many view buying your own home as being part and parcel of the American dream. Finding your dream home in Santa Cruz might be easy; it is often obtaining the financing for it that is a major source of stress. When trying to get a mortgage, you likely will do all that you can to provide brokers and lenders with whatever information that they need, remaining completely transparent throughout the entire process and operating in absolute good faith. Imagine, then, how crushing it may be to later discover that you have been the victim of mortgage fraud.
What is mortgage fraud? The Federal Bureau of Investigation defines it as "some type of material misstatement, misrepresentation, or omission in relation to a mortgage loan which is then relied upon by a lender." Notice how it also lists lenders as being victims in these sorts of schemes. Typically, mortgage fraud (particularly those undertaken for profit) is perpetrated by third party brokers or financing agents who use false information in enticing you to apply for a home loan and/or securing funds through a lending institution. Understanding the different types of mortgage fraud may help you avoid it or identify if you may be involved in one.
Common types of mortgage fraud schemes identified by the FBI include:
- Foreclosure rescue schemes
- Loan modification schemes
- Home equity conversion mortgages
- Illegal property flipping
While the mechanisms of these different schemes may be different, their end goals are typically all the same: to misrepresent a borrowing or purchasing opportunity to you with the intent of profiting from a sale or cashing out equity. While all of the information shared here should not be viewed as legal advice, having representation throughout the home buying process may help you avoid getting caught up in a fraudulent scheme.