Applying For Mortgage? Watch Out For These Potential Red Flags

Finding out that you have been dealing with a fake mortgage specialist can be frustrating. Imagine wasting your time and money on an individual not worthy of your trust. Without a doubt, mortgage fraud can be stressful. For the past few years, mortgage fraud has continued to increase as more and more suspicious activities have gone unnoticed and unpunished. If you are planning to take out a mortgage loan, you need to be careful. Being aware of mortgage fraud schemes will help you stay on the right track. Beware of these red flags as you might fall prey to one of them:

How to identify mortgage fraud schemes?

If you ever notice any inconsistencies in the mortgage file, this is a strong indicator that fraud is taking place. Fact-finding and investigation are all necessary for proving that fraud occurred. Some of the most common schemes you may encounter are:

  • Air Loan: This type of loan refers to a mortgage loan where the property or the buyer does not exist.
  • Foreclosure rescue: A person will represent himself/herself as a property specialist helping the borrower avoid foreclosure. The borrower will fall victim to this scheme and pay for the “services”. Unfortunately, the hapless victim will still end up losing their home.
  • Straw buyer: The perpetrators will disguise themselves as a loan applicant with their true intention concealed.

Other mortgage red flags to watch out for:

If you already understand how the mortgage process works, it will be easy for you to identify if there are any irregularities with the process. At this stage, the only weapon you can use to prevent becoming a victim of fraud is awareness.

  • Take a look at the contract: Be sure to read the contract thoroughly as it will lead to some clues. If you notice that the seller is not indicated on the title, it means that there is something wrong with the transaction. Avoid dealing with people with excessive real estate commission or without any real estate specialist involved.
  • Check for any changes in the mortgage application: You will also notice some changes to the application regardless if it is typed or written. You should also check the purpose of the loan.
  • Questionable income documentation: The applicant does not fully disclose income or tax returns. There is little money in the bank account but the income that has been declared is not aligned with it.

Whether you have applied for a mortgage loan in the past or you are a first-time applicant, it is important that you have a solid understanding of how mortgage fraud takes place. Do not be tempted by shortcuts or quick fixes. You need to follow the correct procedures and report unusual activity or red flags. You can still play an active role in putting a lid on suspicious activities related to the mortgage application.

It is also an advantage if you are going to deal with a trusted and experienced mortgage broker because, at the end of the day, you will gain peace of mind knowing that transactions are valid.

Cape Coral Mortgage, Inc.
3512 Del Prado Blvd. S Ste106
Cape Coral, Fl. 33904
(239) 540 5555