Home equity fraud is a type of real estate fraud. Real estate fraud occurs when one party intentionally uses false information or makes a false representation relating to real estate. Real estate fraud can occur in many forms, including fraudulent transfer of title of real property, recordation of fraudulent real estate documents, mortgage foreclosure consultant fraud, or home equity sales contract fraud.
In general, home equity fraud occurs when someone tries to steal the equity a homeowner has built up in her home.
Home equity fraud can occur in any number of ways. However, the most common type of equity fraud occurs when a homeowner takes out a home equity line of credit (also known as a “HELOC”). Criminals may use several different methods to rob HELOC accounts, but the most common method includes identity-theft scams. Specifically, criminals pose as homeowners who are eager to take out a HELOC on their home.
They obtain the true owner’s information through public records and establish a HELOC, forging the owner’s signatures and rerouting the loan so they receive the line of credit instead of the true homeowner. Because the documents checked for obtaining a mortgage are more comprehensive than what is required for obtaining a HELOC, it is much easier for criminals to commit this type of fraud.
Home equity fraud can also be committed by lenders when a homeowner is behind on her mortgage payments. The lender or financial agency may ask the homeowner to leverage amounts of money against their home in order to steal the home’s equity.
Home equity fraud is illegal and may result in any one of the following consequences:
It’s important to note that home equity fraud can also lead to felony charges depending on the facts and circumstances. This can occur in situations where there is company-wide corruption or where the fraud is built into a company’s operating policies, but it also depends on the amount of money stolen. Many home equity lawsuits are also filed as class action suits if many consumers are affected all at once.
Home equity fraud has become increasingly common, but there are several ways you can protect yourself and the equity in your home. First, be wary if you have a lender who asks anything of you that seems “fishy” such as falsifying information about your home, mortgage status, loan history, or insists that you take out equity in your home in order to pay debt accrued from missed mortgage payments.
To reduce your risk of HELOC fraud, examine your credit reports to see if there is any inaccurate information. If you have taken out a HELOC, check your statements regularly.
Home equity fraud can involve some major legal issues and disputes. You may need to hire a real estate attorney if you need help filing a lawsuit for home equity fraud issues. Your attorney can help determine whether you have a claim and what kind of options you have. In many cases, a monetary damages award can be claimed in order to make up for the losses caused by the fraud.
Last Modified: 05-22-2018 06:46 PM PDTLaw Library Disclaimer
We've helped more than 4 million clients find the right lawyer – for free. Present your case online in minutes. LegalMatch matches you to pre-screened lawyers in your city or county based on the specifics of your case. Within 24 hours experienced local lawyers review it and evaluate if you have a solid case. If so, attorneys respond with an offer to represent you that includes a full attorney profile with details on their fee structure, background, and ratings by other LegalMatch users so you can decide if they're the right lawyer for you.