Real estate fraud includes home equity fraud. When one party purposefully utilizes misleading information or makes a false representation of real estate, this is called real estate fraud. Real estate fraud can take numerous forms, such as fraudulent transfer of real property title, recording of fake real estate documents, mortgage foreclosure consultant fraud, or home equity sales contract fraud.
Home equity fraud happens when someone attempts to take the equity that a homeowner has built up in their home.
Home equity theft occurs when the government takes an individual’s entire property—including all of its equity—over an unpaid property tax debt of any amount and refuses to return the remaining balance once the outstanding tax debt is paid.
If you don’t check your home equity line of credit (HELOC) frequently, now is the time to start. Thieves can access these accounts and siphon off thousands of dollars by stealing home equity and duping lenders.
How Is Home Equity Fraud Achieved?
Home equity fraud can manifest itself in a variety of ways. However, the most common form of equity fraud occurs when a homeowner obtains a home equity line of credit. Criminals may use various methods to rob HELOC accounts, but the most common is identity theft scams.
Criminals, in particular, pose as homeowners eager to obtain a HELOC on their homes.
They obtain the true owner’s information from public records and open a HELOC, forging the owner’s signatures and rerouting the loan so that they receive the line of credit rather than the true homeowner. Because the documents checked for a mortgage are more comprehensive than those required for a HELOC, criminals can commit this type of fraud much more easily.
Lenders may commit home equity fraud when a homeowner falls behind on her mortgage payments. The lender or financial institution may request that the homeowner leverage funds against their home in order to steal the equity.
According to the Federal Bureau of Investigation, mortgage fraud involves misstatements, misrepresentations, and omissions that a lender relies on unknowingly. Mortgage fraud includes home equity loan fraud. Criminals have robbed HELOC accounts using a variety of ways, including identity theft frauds.
Here’s how it works. Identity thieves obtain personal information about you, such as your date of birth, Social Security number, direct deposit account number, and mother’s maiden name, through a variety of means, including public records and email phishing. Criminals utilize this information to impersonate clients, namely you.
The thieves, for example, may use your personal information to open a bogus online bank account and link it to your HELOC. They pretend to be you and phone the bank to learn more about your accounts, request checks, and boost your daily withdrawal limit. The fraudsters then gain online access to the accounts and transfer funds from your HELOC to the account they created and withdraw or transfer the money.
In other words, they’re stealing money by utilizing your personal information, credit score, and the value of your property. One reason criminals can get away with this crime is that opening a HELOC requires few documents, especially if the HELOC is taken out from the lender who holds your mortgage.
You may only become aware of the crime when the financial institution calls you about a late payment, you receive written notification of a missed payment (because the thieves aren’t returning the funds), or you check your credit report and discover incorrect information.
What Are the Legal Consequences for Criminals Committing Home Equity Fraud?
Home equity fraud is illegal and can lead to any of the following outcomes:
- If found guilty of home equity fraud, the offender faces criminal misdemeanor charges that can result in fines and jail time.
- If the perpetrator possesses a business or real estate license, she may lose her business or license.
It is crucial to understand that home equity fraud might result in criminal charges depending on the facts and circumstances. This can happen when there is company-wide corruption or when fraud is integrated into a company’s functioning policies, but it also relies on how much money is taken.
If a large number of consumers are affected at the same time, many home equity claims are brought as class action actions.
Home equity lawsuits frequently result in contract remedies, such as monetary damages awards.
How Can I Protect Myself from Home Equity Fraud?
Home equity fraud is becoming more widespread, but there are some steps you can take to safeguard yourself and your home’s equity.
First, be aware of any lender who requests “fishy” information from you, such as fabricating facts about your property, mortgage status, loan history, or insisting that you pull out equity in your home to settle debt incurred through missed mortgage payments.
Examine your credit reports to check if there is any incorrect information to lower your chance of HELOC fraud. Check your statements frequently if you have a HELOC.
It can be difficult to avoid real estate scams because scammers frequently use advanced technology and interact digitally with their victims.
However, it is critical to protect your personal information and bank accounts.
Here are some strategies for avoiding real estate fraud:
- Consult a qualified professional: Work only with reputable licensed real estate agents and lenders. If someone contacts you out of the blue, make sure they are who they claim to be.
- Protect your personal information: Never provide anyone with your personal or financial information if you don’t trust them. Don’t send financial information via email or website links.
- Avoid paying any upfront fees: Never pay for a service to your home in advance, especially if the person appears to be pressuring you.
- Keep an eye out for last-minute changes: If you’re in the process of purchasing a home and learn of a last-minute change, take the time to confirm that it’s true. Don’t behave rashly or emotionally.’
- Avoid off-market transactions: Finally, no matter how good the deal is, it’s never a good idea to engage in off-market transactions.
If you believe you have been a victim of a real estate scam, you should notify the appropriate authorities. Here are some things you can do:
- Make contact with your mortgage service provider.
- Inform your local law enforcement agency about the real estate scam.
- File a complaint with the Federal Trade Commission.
When a HELOC is frozen, the lender restricts, limits, or suspends the borrower’s access to the credit line. Under such circumstances, the borrower will be unable to access their credit, or the amount they can borrow will be limited. These are determined by the general circumstances of the scenario.
Should I Contact an Attorney If I am the Victim of Home Equity Fraud?
If you are involved in a home equity loan dispute that requires filing a lawsuit, you should consult with an experienced local mortgage lawyer.
An attorney can help you understand your legal rights and options under the laws of your state, as well as review all documentation before you sign it. If necessary, your real estate attorney will be able to represent you in court.
You don’t have to fight a home equity loan dispute by yourself. Use LegalMatch to find the right lawyer for your needs today.