Real estate fraud is an unfortunate situation that can catch some homeowners by surprise. Although we sincerely hope that you never run into any of these situations, it is crucial to be aware of real estate fraud to make sure you can entirely avoid it. Here is a basic overview of some of the more popular types of real estate fraud.
This is when a lender (mortgage company or bank) is led to believe that the house is worth more than it is. Value fraus could happen from an appraiser working illegally to increase funding. When it comes to value fraud, there has to be concealment or misrepresentation. If the value is determined legally and it is worth more than any of the parties thought, it would be that it is not considered to be value fraud.
Title fraud can be a type of forgery. This is when the ownership of the property is fraudulently misrepresented. In other words, the documents are altered or forged to show the wrong owner of the property. Title fraud can be done when it comes to sales and refinancing of properties as well.
Foreclosure fraud happens mostly to people who are in fear of losing their homes. In the attempt to save their home from foreclosure, people can be deceived into choosing a company that seems as though they are trying to help and assistance with the current outstanding mortgage, but in fact, they are just deceitful. What usually happens is the payments are not something that the homeowner can afford, and they end up losing their home and any equity they may have had. At this point, their title has been transferred to the people that were supposedly helping, and the original homeowner has no property. The new owners then go and sell the home for a profit.
Another type of real estate fraud is mortgage fraud. Mortgage fraud applies to the mortgage application and falsifying the information in any way. It could be related to the ownership, or income, any misrepresentations to a mortgage lender. People will use mortgage fraud to get a house that they cannot afford or a home the mortgage company would not approve to hold a mortgage on.
Shadow flipping occurs as a way for realtors to make more commissions for themselves. A realtor will sell a house for a lower price and then assign the contract over at a higher price before the final sale. So, the original homeowner makes no extra money on their home, but the realtor and middle man can make quite a bit of money, and additional commissions.
If you are not aware of some of the different types of real estate fraud that occur, you will be leaving yourself vulnerable to these things happening to you. The best possible way to avoid real estate fraud is to remain honest, choose a well-respected realtor, and an excellent real estate lawyer. The combination of these things will keep you protected against real estate fraud.