UNDERSTANDING AND AVOIDING MORTGAGE FRAUD

1. UNDERSTANDING AND AVOIDING MORTGAGE FRAUD

2. You may not realize it, but when it comes to crimes of a financial nature, mortgages give fraudsters many opportunities to steal and swindle innocent people out of their money. Here are some important facts about mortgage fraud and ways in which you can avoid becoming a victim: What is mortgage fraud? In its most basic terms, mortgage fraud – just as with most types of fraud – occurs when one party deceives another by misrepresenting information, facts and figures. Mortgage fraud can be committed by individuals intending to make a property their primary residence, or by groups of investors defrauding rental properties or committing appraisal fraud when they flip homes.

3. Mortgage fraud for profit and for housing: It’s often industry insiders who commit mortgage fraud for profit, using their specialized knowledge or authority, such as bank officers, attorneys and appraisers. This type of fraud isn’t committed with the aim of securing housing, but to abuse the mortgage lending process to swindle equity from lenders and homeowners. Fraud for housing on the other hand, usually takes the form of illegal actions by a borrower to enable them to acquire or maintain ownership of a property. Income and asset information may be misrepresented on a loan application to try and entice an appraiser to alter the value of a property.

4. Other ways in which mortgage fraud may take place: Property flipping While usually not illegal when a property is simply bought, fixed up and sold on at a profit, if the property is purchased at below the market price, and sold at a profit with the help of a corrupt appraiser, then mortgage fraud may easily have taken place. Occupancy fraud When a borrower claims that a property will be owner-occupied to help them achieve a favorable outcome with the bank, but the property is unoccupied, this is known as occupancy fraud.

5. Air loans Obtained on a property that doesn’t exist or for a borrower that doesn’t exist, air loans are the work of a group of professionals coming together to create fake borrowers and fake chains of title to get a title and property insurance binder. Appraisal fraud This often occurs when a real estate agent, builder, appraiser and loan officer unite to maximise the purchase price of a property and loan amount, to help increase their commissions.

6. What can be done to help combat mortgage fraud? At state, local and federal levels, legislation exists to protect against mortgage fraud, and many states now require real estate, title and insurance agencies to be licensed and monitored by government agencies. Periodic audits are also required of mortgage lending companies to check that their activities and transactions comply with the law. The Mortgage Bankers Association (MBA) and National Association of Mortgage Brokers (NAMB) also have codes of conduct and best practices that are peer-monitored.

7. Working with a licensed and knowledgeable mortgage broker can help you to remain safe from the risks of mortgage fraud, and provided they are registered and have a list of satisfied customers, there is no reason why you shouldn’t safely and legally, get the best mortgage deal for you.

8. Red Key Mortgage is located in Calgary, Alberta. We are a boutique brokerage with high volume serving hundreds of clients locally and nationwide every year. We have a number of associates dealing in mortgages as licensed by the Real Estate Council of Alberta. As a best mortgage broker in Calgary, Red Key Mortgage, will provide all of your available options from the entire mortgage market and allow you to make an educated decision where you'd like your mortgage to go. Red Key Mortgage works with big banks in Canada, as well as over a dozen other AAA lenders. Best of all, our services are paid for by the lenders at no additional cost to our clients. If you are looking for a Calgary mortgage broker, contact us today! We can't wait to get started.