Mortgage fraudsters need your signature, credit info
Article by Joseph Richer, March 2014
“There are two types of real estate-related fraud that home buyers and sellers should be aware of: identity fraud, which I wrote about last week, and this week’s topic — mortgage fraud.
There are various forms, but it boils down to one thing: tricking a financial institution into lending money when it otherwise wouldn’t. While banks and lenders have processes and procedures to reduce their risk, mortgage fraud still takes place. Sometimes the scam is purely about a fraudster making a profit; sometimes it’s an effort by someone to buy a house they can’t really afford.
If you think the only victim in this scenario is the lender, you’re wrong. Aside from the societal costs of mortgage fraud (Canadian Mortgage and Housing Corporation payouts for defaulted loans, police and court costs to deal with offenders, etc.), the fallout often includes people who were talked into participating in a scam, and then find themselves with a home they didn’t really want, a mortgage they can’t afford and/or a severely damaged credit rating.
The key is to not get pulled into this sort of scam, and to report it when you see it.
Common sense is your best defence against mortgage fraud. If someone is trying to get you to complete a real estate deal through dishonest means, or without giving you the information you need to make a decision, do not proceed.
Some important tips:
– Never sign blank documents — or any document without taking the time to read and understand what it means. If you’re unsure about a document, seek independent legal advice.
– Never allow someone else to use your name and credit information in exchange for payment. People have been duped into agreeing to co-sign a mortgage for a stranger or an acquaintance in exchange for a few thousand dollars. In the end, they were on the hook for all the mortgage payments.
– Never use false information when applying for a mortgage. Unscrupulous individuals involved in the transaction may ask you to falsify your employment information or history, including overstating your income to get a mortgage that you wouldn’t otherwise qualify for, or that you can’t really afford.”
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