I have witnessed mortgage fraud and it scares me to death. When I’ve seen it, I walk away because I want no part of it. People can justify it however they want, but the bottom line is it is theft. But how can you tell if it’s mortgage fraud? Lender George Souto of Middletown, Connecticut tells us of red flags that help to identify mortgage fraud,
- Indication that the Borrower will not really be occupying the property, and it is really and investment property, some of the signs of this are:
- Long unrealistic distance between their job and the property.
- The new property is not large enough to adequately house all those who are going to occupy it.
- The Borrower is moving from a larger property into a smaller property, and it is not because they are an empty nester, or someone in a similar circumstance.
- The Borrower states that they are going to sell or rent out the current property, but the property is not listed, and they do not have a lease for a possible renter for the existing property.
- Indications that the Borrower does not have enough of their own funds to purchase the property:
- The downpayment is not from a Checking, Savings, Retirement Account, or Gift from an authorized donor.
- The deposit or downpayment is money from a promissory note on the existing property.
- Funds are from stocks, or bonds that are not publicly traded.
- Face Value of a Life Insurance Policy is listed on the application as an asset in stead of the Cash Value.
Click through to see other red flags. Then if you are a lender, appraiser, or Realtor, avoid it.