Mortgage Fraud is one of the fastest growing white-collar crimes, accounting for 20 percent of all fraud in the United States. Mortgage fraud involves such actions as identity theft, inflated appraisals, straw purchasers and foreclosure scams. Some typical mortgage and foreclosure scams include:
1. The falsification of loan application data such as citizenship, employment history, income and/or credit history which allows an unqualified buyer to obtain a loan;
2. Property flipping occurs when property is purchased and falsely appraised at a higher price and quickly resold;
3. The use of a silent second occurs when a buyer borrows the down payment from the seller through a non-disclosed second mortgage;
4. Inflated appraisals are just that: when an appraiser acts in collusion with a borrower and provides a misleading or false appraisal that inflates the value of the property being purchased;
5. Air loans are falsified loan documents, including appraisals, used to obtain a loan on a nonexistent property;
6. Foreclosure scams, which are very prevalent in today’s turbulent sub-prime market, occur when a homeowner either pays an exorbitant upfront fee for little or no services, or signs a quit claim deed, thereby transferring ownership for a nominal payment;
7. Equity skimming, which is often coupled with a foreclosure scam, is where a property is acquired with a promise to use rent money to continue making mortgage payments.