Unfortunately, there are many people out there who are looking for their next victim. They will do almost anything to take money that doesn’t belong to them. This is called fraud. Due to the complex process of buying a home, many people prey on those who are new to real estate.
Here are some types of real estate fraud that you need to watch out for.
Identity Theft.
Identity theft can really be devastating. It involves someone using your information. When it comes to buying a home, they may apply for a mortgage or buy a home in your name, which you are then required to pay for!
Mortgage fraud.
Mortgage fraud can involve people on both sides of the home buying and selling process. People can falsify their information so that they are approved for a loan. However, the appraiser may also give false data, inflating or deflating the price of the home. Inspectors can fudge the report, which can be quite costly if problems are missed. Flipping schemes involve buying and selling homes to other flippers right away, while getting a cut of the profit.
As you can see, there are a lot of ways to commit mortgage fraud because of the broad definition.
Wire fraud.
Wire fraud happens when someone takes money from you using electronic communications or an interstate communications facility. Because there are so many steps and proceedings that occur when you are buying a house, wire fraud does happen during the settlement process.
Because of this, you need to work with people you trust when buying a home.
Real estate impersonation.
Many people know real estate impersonation fraud by another name, fake real estate agent scam. It is fairly new but becoming more and more common.
By using a professional real estate agent’s name (and credentials), they are able to list homes for sale, especially on Craigslist and other websites. In order to do business with them, they require money to be wired to them, which is how they make their money.
Real estate impersonation seems legitimate and can be very hard to catch.
Refinance Fraud
Many people turn to refinancing as a way to make their payments more affordable. With refinance fraud, the current home owners may mislead the lender to give them a better deal.
Reverse Mortgage Fraud
Others turn to a reverse mortgage, which is just another opportunity for those to scam the system. This may include identity theft because they need the information for someone who would be eligible for a reverse mortgage.
Once they get it, they take the lump sum cash-out option and run with the money!
Equity Skimming.
When you have equity in your home, it means that you owe less than the home is worth. Many people use this extra money as a way to pay off some debt or buy a car.
However, it is just another way to cheat the system. Whether a scammer inflates the purchase price, gets a false appraisal, or an unrecorded lien, they take the equity money and let the home go into foreclosure.
So what can you do?
When you first decide to buy or sell a home, it is important that you only work with people that you trust. Ask around before you hire a real estate professional to help you through the process. Work with reliable lenders and title companies. Don’t just trust those that you see online.
If you already have a home, you need to ask your title company what they are doing to protect your transaction from fraud. If you aren’t happy with them, don’t hesitate to contact us today. Rainer Title is dedicated to protecting you from these types of fraud.
Need to know more? Here at Rainier Title, we saved a client from wire fraud. He got an email from us (it was fake even though it included our email signature blocks) and called us to confirm the new instructions. We were able to figure out that it was a fake, reported it to the FBI and our own IT department to keep an eye out for any others.