Detecting Mortgage Fraud – Part 1
As a full-time real estate investor, we must be very cognizant of anything that can affect our business negatively. There are some nasty practices that sometimes happen in business. We at Canadian Wealth Builders suggest every deal you do is done ethically and with complete transparency. We always suggest each person you deal with is treated with respect and honesty. Sadly, not everyone has the same philosophy.
This article is designed to make you aware of a practice that is becoming more and more common. This is mortgage fraud. We must be able to detect some of the signs that mortgage fraud may be occurring in a deal that we are pursuing by perhaps a seller or a buyer in one of your deals.
Mortgage fraud schemes can be very sophisticated and complex. It can begin from a buyer’s /borrower’s perspective trying to get a mortgage on a deal you are trying to sell. You may not be aware this is transpiring. The fraud can stem from the misrepresentation of the borrower’s income, tax returns, employment information, even the borrower’s identity. This fraud can come from the borrower themselves or some dishonest mortgage brokers have channels to make this happen, all in the name of getting more business.
Larger and better condition
On a property you may be looking at as a potential deal, a seller could describe the property as being larger, or better condition than it actually is. This is regular everyday stuff to be aware of that isn’t necessarily fraud, it’s just how some sellers are. We must do our due dilligence on every deal in order to get all correct details of a property.
Not disclosing pertinent info
Where the fraud can come from a seller could be knowing that the property has mold and cover it up with a “new renovation”. It may have been used as a marijuana grow-op or drug laboratory. In a drug laboratory, the group may do superficial renovations to cover up the damage before the property is sold to you. You may discover this after the fact when it is too late.
Where alot of the fraud comes in is if a buyer is in cahoots with a seller as well as potentially the realtor, mortgage broker, lawyer and/or the appraiser. The seller or buyer could get a falsified appraisal and/or inspection report or many other documents trying to prove that the property is worth more than it actually is in order to get more financing.
I will get into more of this in the next article….stay tuned!
World Wealth Builders offers many unique, practical, “out of the box” real estate investor trainings which offers the student hands on, in the trenches style instruction to facilitate both a different mindset as well as a successful and lucrative real estate investment business. To find out more, please go to www.worldwealthbuilders.com
For the next article in this series – Detecting Mortgage Fraud -Part 2
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