Avoiding Mortgage Fraud and Scams in Charlotte

It can be a buyer’s or a seller’s worst nightmare – mortgage fraud and scams. Criminal activity and ethical violations can be found in every sector and industry, but the financial and housing sectors seem to be especially susceptible to fraud and scams. Generally, fraud is committed whenever industry professionals omit, misrepresent, or even falsify important details about a client’s income, debt, or credit or about the value or condition of a property – all with the goal of reaping greater profits. If you don’t want to be a victim, you need to know how to avoid mortgage fraud and scams in Charlotte. You can do that by being aware of the most common kinds of fraud and scams floating around.

Appraisal Fraud

Appraisal fraud most commonly occurs in conjunction with property flipping. This is how it works.

A property – say, a house for the putative purpose of flipping – is purchase below market value and then is immediately sold at a hefty profit. This requires the collusion of a shady appraiser who falsely verifies that the property is worth a lot more, sometimes double, the initial purchase amount.

It can also be a same-day closing and flipping scam. This scenario involves a fraudulent chain of title and appraisal and three parties – the original seller, the flipper, and the defrauded end buyer. What happens is this: the seller contacts the flipper, the flipper buys the property at well below market value, and then the flipper provides the buyer a fraudulent title. It can be done because it all happens so fast. But the end result is that the buyer gets a bad title (showing the flipper as the owner when that’s not actually the case), and the buyer shells out a lot of cash owing to the inflated appraisal.

Identity Theft

This is the probably the most common of the mortgage fraud and scams in Charlotte perpetrated against individuals. In this case, a buyer fraudulently gets financing by using personal information stolen from an unwitting victim – information such as the person’s Social Security number and address and stolen documents like pay stubs, W-2s, and tax returns. In many cases, falsified documents are involved as well: employment verification letters and even property-ownership records.

The upshot is that the fraud perpetrator obtains financing for property they don’t actually own in someone else’s name – just getting the money in their hands. And then that hapless victim whose identity and information was stolen is responsible for the financial obligations till matters can be legally straightened out and put right.

Foreclosure Rescue Fraud

This third of the mortgage fraud and scams in Charlotte involves the sale and purchase of a financial product that is never delivered. Some companies are cashing in by offering so-called foreclosure rescue services to consumers in financial distress.

Such companies promise to be able to adjust the loan so that their customers (victims) will have lower mortgage payments, and so they will be able to keep making payments and thus avoid foreclosure. The companies will often offer guarantees and claim government affiliation and backing. So the customer buys this foreclosure rescue product, the company promises to negotiate new loan terms, and then the company takes the money and disappears. The end result is that the victim is in even worse financial shape and in even more danger of foreclosure.

Don’t get caught in this nightmare. Be aware of and know how to avoid mortgage fraud and scams in Charlotte. These criminals know what they’re doing, so you should, too.

Do you have questions about financing a home in Charlotte? We can help! Send us a message or give us a call today! 704-775-1236

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