How to Help Detect Real Estate Fraud

How to Help Detect Real Estate Fraud
If you work together and plan ahead, you can both pay off debt and save for the future. Fei Meng
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Dear Monty: I rented out my house to a couple I thought were married. A year later, they decided to buy a home. The woman contacted me by phone with the news that they were not married, and the loan she applied for stated she had to be living alone. She then said they were splitting up once they moved. The form I received from the lender only asked about paying on time, which she did. Even though the lender didn’t ask, should I have included that her possible husband was on the lease? I have since found out he is living in the new house. I should report her. Was she committing mortgage fraud?
Monty’s Answer: Lying on a mortgage loan application is illegal. It is likely mortgage fraud. Here is a dated Dear Monty article about mortgage fraud that offers information about what you can do: DearMonty.com/neighbor-committing-mortgage-fraud. Mortgage fraud is a serious problem for the taxpayer. The dollar amounts on a single transaction loss are so large that the overall losses are significant. She lied to you. If you want to report her, the resources in the link above will investigate and determine if it is a crime. Penalties can be severe, but they vary from state to state.

Awareness Helps Prevent Real Estate Fraud

No. 1: Fraud to obtain ownership is one of the main circumstances in which mortgage fraud occurs. If you are renting a home to others, you are more susceptible. For example, borrowers may claim they own the house and lie about their income or other assets to gain loan approval. They work in concert with a duplicitous professional or professionals, including anyone from an appraiser, real estate agent, lender, attorney, title company, or more. They create phony documents to show ownership and secure the loan. A closing occurs, and the borrower disappears with the loan proceeds.
Richard Montgomery
Richard Montgomery
Author
Richard Montgomery is the founder of PropBox, the first advertising platform to bring home sellers and buyers directly together to negotiate online. He offers readers unbiased real estate advice. Follow him on Twitter at @dearmonty or DearMonty.com
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