Avoiding Mortgage Fraud By Brokers Or Lenders
Learn how to spot and avoid mortgage fraud and loan irregularities attempted by broker or lender representatives.When Lenders Attempt Mortgage Fraud
Mortgage fraud reflects efforts by lenders to impose excessive above market or even usurious interest rates on your mortgage loan. Interest rates may be 2% or even 10% above prevailing market rates. Lenders target uninformed consumers, disadvantaged minorities, young families and individuals with limited credit management experience.
* How Do You Spot Mortgage Fraud? Mortgage fraud loan prevention is possible by understanding the strategies utilized by 'bent' brokers.
Key to any successful mortgage fraud is the ability of the broker to pressurize borrowers into either falsifying personal information or to execute a partial list of required documents.
The mortgage fraud broker may willfully set out to confuse or intimidate a naïve borrower, instructing the borrower to leave blank information areas. A loan mortgage fraud can also occur where the contract and related documents become altered by the broker, after prior execution by the borrower.
* Breaking Lending Rules & Writing Too Large Loans. In a volatile interest rate environment, mortgage fraud brokers may be tempted to act in a predatory manner in order to increase or sustain business levels, regardless of the damage or implications on the borrowers.
A mortgage fraud company also includes those firms which look to "sell" more money or mortgage than the house is worth, such as a $125,000 mortgage applied to a $100,000 value premise. In setting up a bogus loan-to-home value relationship, the mortgage fraud company manages to get more funds into the market. Meanwhile, the borrower and now victim of mortgage fraud must now ante up excessive loan repayments on a monthly basis.
* Watch Out For Incomplete Documents & Excessive Penalty Provisions. Analysis of mortgage fraud detection patterns reveals in certain cases that in addition to incomplete documentation supporting transactions, other instances of mortgage fraud abuse included penalty provisions where overdue interest penalties were being calculated on a daily basis, rather than the regular and customary monthly approach.
Mortgage fraud detection revealed cases where borrowers who had re-financed ostensibly to lower monthly payments, in fact, discovered afterwards that monthly payments had risen.
* Watch Out For Hidden "Closing Costs". Other indicators of mortgage fraud loan abuse by lenders include unexpected or undisclosed closing costs, where a percentage point here or there suddenly show up on the closing documents. At this point and due to the stressful as well as emotional nature of home buying, many anxious borrowers will succumb to mortgage fraud broker sales pressure tactics to "sign now, or we don't think you'll qualify for a loan elsewhere" or similar extortive gimmicks.
* Consumers Beware - Trap Of Credit Insurance. First time borrowers might also succumb to broker mortgage fraud scare tactics such as the surprise announcement that the borrower should "carefully consider the need for credit insurance, just in case you run into a jam and can't service your mortgage, or make a balloon loan payment".
Such instances of mortgage fraud loan scare tactics should be a strong indicator to not proceed with the closing, and to immediately contact your state's attorney general, which offices will have a mortgage fraud consumer protection business group who can guide you.
* Consumer Tip - Go Direct To Lender For Deal Verification. Because mortgage fraud can include subtle as well as deceptive business practices, borrowers need to be sure that their ability to pay has been verified directly by the lender. Additionally, mortgage fraud prevention necessitates that in exchange for paying an above-market interest rate, the borrower obtains some meaningful benefit.
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