Here are 6 types of mortgage fraud that have been found in applications. According to Corelogic, fraud is again on the rise. It climbed 12% year over year. Potential borrowers have provided false or misleading information in order to qualify for a mortgage when home prices are rising and demand is strong. This issue was rampant prior to 2007 and many attributed the crash to the banks making loans to those who could not not afford their payment. Are we heading down the same road again?
Income fraud: An applicant misrepresents the existence, continuance, source, or amount of their income.
Occupancy fraud: An applicant deliberately misstates the intended use of a property as a primary or secondary residence or an investment.
Transaction fraud: The applicant misrepresents the nature of the transaction, such as an undisclosed agreement between parties, falsified down payments, non-arm’s-length sale, or use of a straw buyer.
Property fraud: An applicant intentionally misrepresents information about the property or its value.
Undisclosed real estate debt: An applicant fails to disclose additional real estate debt or previous foreclosures.
Identity fraud: An applicant alters their identity or credit history, or uses a false identity.
Source: “2018 Annual Mortgage Fraud Report,” CoreLogic (September 2018 & Realtor Magazine September 17, 2018