According to the FBI, the latest mortgage scams take many different forms:
- "Builder-bailout" schemes where developers unload excess inventory through financial trickery;
- Foreclosure rescue frauds that trick homeowners into signing over the deed to their house;
- Seller-assistance scams that use false appraisals to sell homes;
- Identity theft that leads to home equity credit lines being opened and drained."
Mortgage Fraud Cases Increase
In the past three years, the FBI's mortgage fraud caseload has dramatically increased. By the end of 2007, the FBI was handling more than 1,200 mortgage fraud investigations -- a 47 percent increase from 2006 and a 176 percent increase from 2003.Special Agent Scott Broshears, a mortgage fraud supervisor who works at FBI Headquarters in Washington, D.C. says there are steps that can be taken to avoid mortgage fraud. "And while some of these steps may require you to do a little extra work now," adds Agent Broshears, "in the long run it may save you aggravation, money, and even your house."
Avoiding Mortgage Fraud
According to an FBI advisory, these are steps to take to avoid becoming the victim of mortgage fraud:- Get referrals for real estate and mortgage professionals when you want to buy or sell a home. And once you do, check out their licenses with state, county, or city regulatory agencies. Most of these people are exceedingly honest and above-board—it's just a small percentage who have given the overall profession a black eye.
- Do your own research into what other homes in the neighborhood have sold for. Also, look into recent tax assessments of neighborhood homes.
- Beware of "no money down" loans. These are a gimmick used to entice people to buy a home they really can't afford.
- Don't let anyone talk you into making a false statement on your loan application, like overstating your income or lying about where your down payment is coming from.
- Never sign a blank document or a document containing blank lines. Be sure to read and review all loan documents signed at closing. If you don't understand what you're signing, get an attorney who can review the documents for you.
Work With Your Mortgage Lender
Special agent Broshears recommends that people who are getting into financial difficulties contact their lender before the situation gets to the foreclosure stage."The lenders don't want your house," he explains, "and most will work with you to help you keep it. Plus, they're already dealing with a large number of foreclosures on homeowners who didn't seek their help in time—they don't want any more."
For more information, see the FBI Mortgage Fraud website.
