How to Protect Yourself When Purchasing or Refinancing a HomeBeware of promises of "easy money" in real estate. Consumers who knowingly misrepresent information when buying or refinancing a home are committing mortgage fraud.
What is Mortgage Fraud?
Mortgage fraud occurs when someone deliberately misrepresents information to obtain mortgage financing that would not have been granted if the truth had been known. This can include:
Another common form of fraud is when a con artist convinces someone with good credit to act as a "straw buyer".
A straw buyer is someone who agrees to put his or her name on a mortgage application on behalf of another person. In return for their participation, straw buyers may be offered cash or promised high returns when the property is sold. Often, straw buyers are deceived into believing they will not be responsible for the mortgage payments.
Consequences of Misrepresentation
Borrowers who misrepresent information and straw buyers who allow a property to be purchased in their name are committing mortgage fraud and will be liable for any financial shortfall in the event of default. They may also be held criminally responsible for their misrepresentation.
What Can You Do to Protect Yourself?To protect yourself and your family from becoming victims of, or accomplices to mortgage fraud, be an informed consumer. This means:
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