Sound Too Good to be True? It Just Might Be a Mortgage Fraud Scheme

Real Estate Law

When you fall in love with a property, or want to own a house so badly, you might jump at any deal you can get—even if (or, perhaps because) it sounds “too good to be true.” But before you sign your name to any document, be very careful.

Mortgage fraud schemes come in many different forms and can crop up at any stage of a real estate deal.

Your first thought if an offer sounds “too good to be true” should be that it is. In other words, that there is something fishy going on and you probably need to walk away before you become some mortgage fraudster’s next victim.

Fraud and Mortgage Fraud

What exactly is fraud and mortgage fraud in particular?

In civil (as opposed to criminal) cases, fraud is the “intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right.” Fraud and mortgage fraud can take any number of forms. In its essence, fraud is aimed at stealing money from you. Unfortunately, the criminals who conduct these schemes are more sophisticated than ever. They take advantage of special circumstances like pending foreclosures, divorces, serious injuries or illness that cause financial distress and other disasters. Mortgage fraud is a multi-billion dollar business run by criminals. Mortgage fraud does not happen by mistake. It is the intentional deception, misstatement, misrepresentation, or omission of information for the purpose of inducing a loan.

Mortgage fraud can occur at any step in the process of obtaining a residential mortgage, including the:

  • Solicitation
  • Application
  • Origination
  • Negotiation of terms,
  • Third-party provider services
  • Underwriting
  • Signing, and
  • Closing of a loan.

Most mortgage fraud schemes are a variation of common elements. Common mortgage fraud schemes include things like:

  • Inducing appraisers to inflate property values in order to obtain a larger mortgage loan for the “straw borrower.”
  • Submitting fake invoices for phantom “upgrades” or “renovations” that falsely inflate the value of the property in order for the fraudster, the “straw borrower” or “investor” to get a larger mortgage.
  • Quit claiming the property back to the seller or to a co-conspirator without notice to or permission from the lender.

These are simply a few of the common mortgage fraud schemes you need to be aware of. If you find there is something you are uncomfortable with or unsure of in the terms of any real estate deal you are involved with, be cautious. Consult experienced real estate counsel. Do your research, and remember, if it sounds “too good to be true,” it probably involves some kind of fraud.

Protecting Your Rights

At the Law Offices of Mark Weinstein, we put our real estate experience to work for you. We have offices in Cumming and we serve Atlanta and multiple counties, including: Clayton County, Cobb County, Dekalb County, Douglas County, Fulton County, and Paulding County, among others.  To schedule your free phone consultation, call us at: 770-888-7707. Or contact us here.

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