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How you can be the victim of mortgage fraud

On Behalf of | Mar 19, 2024 | Fraud

Buying a California home is often a lengthy process in which you must attest to a number of facts before the sale can be completed. For instance, you’ll need to verify your income as well as the value of the home you’d like to purchase. Of course, it’s possible to fall victim to fraud even if you are able to verify important information about your loan or the property in question.

Examples of mortgage fraud

One prime example of mortgage fraud includes the use of your name or other personal information without your consent. Your information is used by another party to obtain credit or otherwise make it look like the real buyer is qualified to obtain financing. Often, the fraudster will fail to make payments or take other actions that could lead to a foreclosure or other black marks on your credit report.

Equity skimming involves the use of a straw buyer to obtain a property that an investor might not be able to purchase alone. After the sale is complete, the straw buyer passes ownership of the house to the investor. Often, the investor will rent the home until it is foreclosed upon for failure to make loan payments.

Appraisal manipulation is a common scam

An appraiser may undervalue a home to make it easier for an investor to purchase below market value. It is then either sold as-is for a profit or fixed up and put on the market as soon as possible. Conversely, an appraiser may also inflate the value of the property so that it will sell for a higher price and result in increased commissions for those involved with the scheme.

If you believe that you’re the victim of mortgage fraud, you may be entitled to compensation for your losses. You may be able to minimize your risk of being a victim of fraud by contacting your lender directly if you’re asked to send money or given other directions by email or text. Your lender may also answer any questions you might have about an appraisal.