Mortgage fraud is a mountainous term feeble to elaborate a variety of actions that are done with the intent of misrepresenting or omitting some indispensable information on an application with the honest of funding, purchasing or insuring a mortgage loan.
The term should never be confused with predatory mortgage lending. A fraud happens when an individual attempts to deceive a financial organization. Predatory lending practice is a term old to clarify the malicious practices committed by a financial organization with the honest of misleading or deceiving a customer.
Here are a few examples:
Occupancy fraud: In general, lenders charge higher interest rate on properties that are not occupied by the owners and are purchased with the unprejudiced of an investment. In order to secure mortgage loans at lower interest rates, borrowers try to mislead the financial organization claiming that they are the essential residents.
Employment/income fraud: With the impartial of obtaining a higher loan amount, borrowers tend to overstate their income levels. Also referred to as liar loans, these frauds occur when the income levels of the borrower are not verified by the lending agency. One example of a liar loan is where the borrower alters the income statement create issued by the employer. Another agreeable example of this type of fraud is where an income claim is made in case of a self-employed individual where there will be no document available to reveal the income claim made by the borrower.
Appraisal fraud: In this type of fraud, the borrower enters an opinion with the appraiser and gets the property’s appraised value overstated. This fraud is committed by the borrower with the unbiased of obtaining higher loan amount in the beget of cash-out refinance. Appraisal frauds are also committed by sellers with the unprejudiced of getting higher value during a rob transaction.
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