Applying for a mortgage? Here is what you need to know about mortgage fraud.
The mortgage interest rates are near record lows right now, making it more appealing and affordable for homeowners to apply for a mortgage loan. Yet, it is still very difficult to qualify for one due to stringent pre-approval rules. With more individuals having a hard time getting a mortgage comes a risk of being involved in mortgage fraud. Mortgage fraud is one of the most common ones. It occurs when an individual deliberately misrepresents or withholds information to obtain mortgage financing.
Some of the common examples of mortgage fraud include misstating or inflating the borrower’s current financial situation such as a job position or status, income, or the length of employment. It is also considered to be mortgage fraud if the borrower fails to disclose vital information such as existence of other mortgages, debts, or the fact that the property being mortgaged is a rental property. Another example of mortgage fraud arises in a situation when a person is acting as a “straw buyer”. This happens when a person with good credit score is used to apply for a mortgage for someone else. Borrowers who knowingly misrepresent facts on a mortgage application, fabricate documents, or act as a “straw buyer” to obtain mortgage financing are all committing mortgage fraud and can face dire consequences, including being held criminally responsible for misrepresentation.
When applying for a mortgage, you should always provide accurate information on your mortgage application, use a licensed mortgage agent or broker, and read over all documents before signing anything. Should you ever be in doubt, have a lawyer review your mortgage documents to ensure you understand every intricate detail.
The content of this article does not constitute legal advice and is for general informational purposes only.