Mortgage Fraud and Foreclosure

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What Is Mortgage Fraud?

In recent years, mortgage loan fraud has become one of the fastest growing forms of white-collar crime. Usually, mortgage fraud occurs when someone makes a misstatement to a lender in obtaining a mortgage. The recent surge in foreclosures has provided criminals with another opportunity to make a quick profit at homeowners’ expense.

What Are the Different Types of Foreclosure Fraud?

There are several common forms of foreclosure fraud. However, they all take advantage of vulnerable homeowners desperate to avoid losing their homes. One common type of fraud occurs when the scammer promises to stop the foreclosure for a fee, and then simply pockets the payment and does nothing.

Another, more extreme form of fraud occurs where a scammer promises to pay off the mortgage while allowing the homeowner to stay in the property as a renter, with the option to purchase the home back later. However, as part of the deal, the homeowner has to deed the property to a new borrower that is "investing" in the property, but who is actually part of the scam. This person strips the home of its equity, and both parties disappear. The homeowner is now merely a renter in a house they no longer own, and will eventually be evicted.

How Can I Avoid Being a Victim of Foreclosure Fraud?

If a deal seems too good to be true, it probably is. Be cautious in who you trust, particularly where someone is offering to alleviate any or all of your mortgage debt. Be sure that you understand the mortgage and foreclosure process, and that you work with trustworthy professionals and companies. If you are unfamiliar with the person or business that is offering help, do some research on them and read all documents before you sign them.

Should I Consult a Lawyer?

If you suspect that you have been a victim of mortgage fraud, you should consult with a lawyer as soon as possible. An experienced real estate attorney can review your situation and take action if needed. Additionally, if you need help reviewing documents and understanding your rights during the foreclosure process, an attorney can help.

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Last Modified: 02-12-2014 10:46 AM PST

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