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Serious Questions About Mortgage Fraud
What is mortgage fraud?
Mortgage and estate fraud are a growing threat to homeowner security in many parts of the country. There are two main types of mortgage fraud. The most common is the practice of falsifying information to illegally secure mortgage funding. In some cases, an applicant will borrow money to buy a property at a highly inflated price from an accomplice who recently purchased it for much less. The two will then abscond with the difference between the sale prices, leaving the lender with a property worth much less than declared. The other type of mortgage fraud specifically involves the practice of title fraud. In these cases, a criminal uses stolen or forged documents, in order to assume the identity of a person who owns a property (and has a good credit rating). The thief then sells the property or borrows against it, and directs the funds to his own account.
How serious is mortgage fraud?
There are indications that mortgage fraud is increasing at an alarming rate in virtually every jurisdiction in North America. In fact, it is a crime so easily hidden that experts believe organized crime sees mortgage fraud as ripe territory for expansion. This does not bode well for neither borrowers nor lenders, as mortgage fraud precautions are sure to drive up the cost of lending money, and such costs will without doubt, be passed on to the consumer.
What can be done about mortgage fraud?
One of the most important ways brokers and lenders can protect themselves and their customers is by getting to know their clients personally, and reporting any unusual patterns in the transfer of ownership or the extension of credit. This is not easy in today's highly competitive world of fast-paced, computer-controlled financing. So property purchasers cannot rely on laws and procedures alone for protection. Instead, they should protect their investments through title insurance. In addition it may be wise to consider subscribing to a credit monitoring service, which alerts consumers of any financial activity that may have affected their credit rating without their prior knowledge.
Industry analysts are quick to point out that only a small percentage of mortgage transactions are subject to fraud. However, with the acceleration of technology and banking conveniences, there is sure to be more exploitation of consumers by modern-day swindlers and fraudsters. Clearly, the sooner homeowners and authorities are aware of suspicious transfers of money, the more likely it is that the criminals will be caught.
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Copyright ©2007 Peter Kunz. All rights reserved. |
Royal LePage Partners Realty is an independently owned and operated brokerage. |
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