It’s an unfortunate truth – as long as a system exists, there will be people who will attempt to defraud it. Given the large sums of money people tend to deal with, mortgages are a particularly attractive, juicy target for such criminals. It’s imperative to recognize the signs that you might be in their crosshairs, lest you end up going from a target to a victim.
A mortgage is the biggest, most important contract most of us will ever sign – and one with a certain sense of finality to it. We’re telling ourselves that this is it. This is where we’ve decided to put down roots, where we’re going to live for at least the next decade.
Particularly given the current economic climate, being able to afford a mortgage is also something of a point of pride. An achievement to outshine all achievements. It’s easy to get caught up on that; to get lost in the moment and forget to practice your due diligence.
And that’s what criminals are counting on.
It should come as no surprise that mortgage fraud is unfortunately common, and instances of fraud growing more frequent. Real estate is, after all, an extremely lucrative field. We’re talking about hundreds of thousands of dollars – more than most people make in a year.
The issue here is that this particular breed of fraud doesn’t always take the form some people might expect. Very rarely will you encounter a shyster who tries to talk you into a poorly-disguised, thinly-veiled scam. The men and women who commit mortgage fraud tend to be a bit more creative about it.
That isn’t to say there aren’t red flags that you can teach yourself to recognize. Although there are many different types of mortgage fraud that you may encounter, they all tend to share a few traits in common. Picking up on those traits can make all the difference in the world.
Promises and Guarantees
Did someone claim they could get you a huge reduction on what you owe on your mortgage? Did they tell you upfront that they could prevent foreclosure? Generally speaking, if a realtor foreclosure specialist or seller promises you anything, proceed with caution – they might be trying to fleece you.
The buying and selling of homes is not a business that deals in absolutes, save for whether or not your credit score is good enough and whether you can afford the down-payment. Always keep that in mind.
Everything Seems Too Good To Be True
Amazing deals do exist, but if an offer strains the limits of your common-sense, it’s probably best to get a second opinion. Are you really being offered a property at way below market price, or is there something more going on beneath the surface? Is your mortgage broker really giving you a 1% interest rate, or are they planning on skipping town with your money?
As a general rule, when in doubt, bring in a third party. A fresh set of eyes, ideally one with a solid understanding of real estate law. Someone who can pick up on what you may have missed.
They’re Making Unreasonable Demands
Is your mortgage broker or realtor pushing you to move forward with a deal without first consulting with a legal expert? Are you being pressured to put someone else’s name on the deed to your home? Does the seller of a property get offended if you request to bring in an appraiser or have an inspection done? Do they want things kept entirely confidential?
Run away. A reasonable seller will never balk at an appraisal, nor will they be offended if you wish to speak to a legal expert at any point.
Something Just Doesn’t Smell Right
Take a close and careful look at all the documents you’ve been provided in connection with your pending mortgage, and speak to the seller. Someone who’s above-board will have no trouble providing you with complete information on their property and its occupants. Someone who’s trying to defraud you will get flighty.
They might request that you keep the deal confidential, or promise you the relevant information ‘later.’ Say no, and consider purchasing a different property – no matter how much you might want this one.
Don’t Let Yourself Be Taken For A Ride
Your mortgage is probably the biggest purchase you’ll ever make. You need to ensure you’re taking the utmost care when you commit to it – that you know how to recognize the warning signs that someone’s trying to defraud you, and understand when it’s time to back out of a deal.
As a general rule, you should always have a legal expert on-hand whenever you’re going through a deal like this. Someone you know you can trust, and who’s going in without any ulterior motives. Run everything by them, and you’ll be able to find a mortgage that’s totally above-board, and ultimately enjoy your new home.
SAM SHALOMJUN 28, 2019
Ryan B. Bormaster is the managing attorney at Bormaster Law. The law firm practices in a number of areas, including real estate law.