How To Avoid Mortgage Fraud

During an uncertain housing market, poor sales and foreclosures, it is even more important that consumers are vigilantly keeping an eye out for mortgage fraud. Not only is it financially painful, but it also can wreck havoc on your credit history, thereby crippling your chances of re-entering the market anytime soon. Follow these tips to learn how not to be caught in mortgage fraud.

Avoid Mortgage Fraud By Reading

Even reputable lenders provide long contracts filled with confusing jargon. Read every page of the contract. This applies to everything, but in the case of mortgage loans, borrowers tend to rush through the document, trusting that the lenders and the Realtors have included all the correct information.

Take the time to go through each page and write down your questions regarding parts you do not understand. Look for errors to save time later and never feel like you have to sign the document. If you feel lost, go to non-profit HUD -- they assist borrowers with loan application reviews.

Stop Mortgage Fraud By Double-Checking

All borrowers get a copy of the loan documents, so make sure you ask for a copy of the original. Compare the original to your copy. The original copy is what the borrowers have to follow, not the copy. Again, although you may think the documents are the same, subtle changes can affect the terms of the loan. Any unexplainable costs or interest rate spikes are red flags.

Do not risk penalty of perjury by providing false information to get your loan to go through faster. Real estate professionals who advise you to do so are not the ones who could get in trouble. It is the borrower’s responsibility to put down the right information, and if a lender says that it is not a big deal, beware.

Avoid Mortgage Fraud By Researching

Taking out a mortgage is a huge undertaking, so you want the right people to handle your finances. Do some background research on your real estate agent and broker before giving out personal information or signing any papers. Look for complaints or lawsuits and reevaluate if you want to trust these individuals with your finances.

Ask what your broker will earn on your loan transaction, since the percentage the broker earns can correlate to the interest rate you pay. Reading and reviewing everything twice over will keep you well informed of your loan and prevent mortgage fraud from happening right in front of you.