Financial uncertainty and additional strain on individuals is common in an economic recession. Mortgage fraud cases have been on the rise with the current state of the housing market. Today, we at Advanced Private Investigator & Security of Miami, FL would like to share the types of mortgage fraud where private investigators and attorneys can help remedy the situation.
Main Types of Mortgage Fraud
The act of intentionally deceiving a buyer or lender to purchase, fund or insure a mortgage loan is mortgage fraud. Fraud for profit and fraud for housing are the two primary categories of mortgage fraud. Both borrowers and industry insiders are capable of being victims or culprits of mortgage fraud. Below is a breakdown of the types of mortgage fraud.
Fraud for Housing. Typically committed by borrowers to gain and/or maintain ownership of property is fraud by housing. Enticing an appraiser to manipulate a property’s appraised value or lying about their income or assets on their mortgage application are examples.
Fraud for Profit. Industry insiders such as bank officers, appraisers, attorneys, mortgage brokers, and other professionals are most likely to commit fraud for profit. Intentionally misusing the mortgage lending process to steal funds and equity, these insiders take advantage of lenders and/or homeowners using their knowledge of mortgage loans and real estate.
What is a Common Mortgage Fraud Tactic?
Whether you are a borrower or insider, there is a lot of different mortgage schemes out there you should be aware of.
1) Identity Fraud. Though it’s still one of the most common scams out there, identity fraud for home buying occurs when the buyer fraudulently uses another person’s information. Identity fraud is one of the oldest scams in the book. When the buyer fraudulently uses another person’s information such as their address, social security number, and financial information in order to obtain financing, identity fraud for home buying occurs. By using another person’s financial information such as tax returns, bank information, W-2s, and employment verification letters, identity fraud can also be used to obtain a better mortgage loan.
2) Occupancy Fraud. When a borrower falsely claims the use of the property or home for a more favorable bank status is occupancy fraud. The owner will claim that the home will be owner-occupied though they will live somewhere else, and rather the property will remain vacant or is rented out to tenants.
3) Illegal House Flipping Fraud. In addition to providing entertainment on TV, house flipping has been a popular business for years. It is not illegal to buy, renovate, and then sell a home. Quickly selling a house, after buying a property below market value, for a higher cost through the help of a corrupt appraiser who inflates the value of the property however is illegal.
4) Appraisal Fraud. When the real estate agent, homebuilder, appraiser, and loan officer work together to maximize the buying price and loan amount on a home so they can receive a higher commission payout, an appraisal fraud occurs. Because there are several different characters involved in this scheme, these loan frauds are a more complicated, but they do still occur.
5) Predatory Loans. Mortgage provider may have the buyer or applicant provide false information on their mortgage application, such as down payment, assets, income, or expenses are predatory loans. Fraud can also occur within the industry against other professionals. When a group of industry professionals create a fake borrower and a fake chain of title to get the title and property insurance binder is a prime example.
Private Investigator & Security Services in Greater Miami, Sunny Isles, Hialeah, Fort Lauderdale, Pembroke Pines, Hollywood, Miramar, Boca Raton, West Palm Beach & Miami Gardens Florida
Whether you are an attorney working mortgage fraud cases or a victim, you need a private investigator working for your attorney or your practice to help collect evidence through surveillance and investigative work. Call Advanced Private Investigator & Security of Miami, FL today!.