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Even lying on your application is already a mortgage fraud. Perhaps your real estate agent says it’s no big deal, but IT IS actually a big deal. Then you start to think it’s really no bid deal because you don’t know that much and it seems that you doubt about being approved on your loan application.

FBI defines mortgage fraud as “any material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan.” This so-called ‘creative financing’ actually started in the 1970s. During those times, if the lender discovered that there was some false information on your application, you could immediately find yourself in jail and more often than not, it required immediate full payment of your loan or pay six-figure fines.

Mortgage fraud varies in activities and here are some:

1. An individual claims a certain income or asset that s/he actually doesn’t have.

2. An individual gives an inflated appraisal in order to obtain a mortgage for more than a property is actually worth.

3. An individual pretends to be the borrower in behalf of the person who is actually buying a property.

4. An individual pretends to provide financial help to a financially stressed homeowner in order to skim off equity from the property.

Mortgage fraud refers to many activities by buyers, sellers, agents, and even mortgage lenders themselves, here are some of the mortgage fraud signs as mentioned in Fannie Mae’s Mortgage Fraud Overview (2007):

1. Loan participants/Motivations

2. Information discrepancies

3. SSN discrepancies

4. Document discrepancies

5. Undisclosed Mortgages

These indicators in Fannie Mae’s report was further broke down into Loan application, Credit Report, Employment and Income Verification and Appraisal. So, it is wise to be informed with these red flags so you can guard yourself as well as your investment and cash. If you are specifically involved in any real estate transactions, Fannie Mae suggests that you know the people with whom you do business with, educate yourself with the common mortgage schemes, ensure that every document is accurate, and report any suspicious mortgage fraud activity that you know.

Remember that the impact of mortgage fraud in Palm Beach Real Estate is tremendous so the best strategy is prevention. Protect your Homes Buford Georgia by educating yourself with the common red flags of mortgage fraud schemes.

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