In order to obtain favorable loan terms, claiming that subject properties will be the primary residences instead of vacation homes or investment properties. Also: when applying for loans for properties that others (i.e., family members) will actually occupy.
Overstating income to qualify for larger mortgages and understating income to qualify for hardship concessions and modifications.
Overstating home value to obtain more money from a sale of property or cash-out refinancing and understating home value in connection with a plan to purchase a property at a discount to market value.
Misrepresenting whether, where, and for how long the applicants have been employed, whether they are unemployed or collecting unemployment benefits, and whether they are independent contractors or business owners.
Failing to list significant financial liabilities on the loan application (i.e., other mortgages, car loans, or student loans).
Faking legal documents and alternative payment methods to argue that existing mortgage obligations are invalid or illegal, or to purport to extinguish mortgage balances. Individuals orchestrating debt elimination schemes typically charge borrowers a fee for these debt elimination "services".
An SSN or other government identification card or number that belongs to someone other than the applicant in a loan application is used by the perpetrator. Identity Theft includes broader use of another's identity or identifiers (beyond an SSN) to obtain a mortgage or perpetrate a "fraud for profit" scheme.
Financial institutions need be aware of illegal "reverse mortgage" schemes, which unfortunately targets seniors who own a home or who are coerced into taking title to a home. The purpose of this scam is to steal or otherwise acquire some or all of the funds which senior receives from a government HECM program. This fraud has other nefarious features, such as appraisal fraud (i.e., increasing the stated value of the home), investment fraud to acquire the HECM funds from the senior under the guise of future profits for the senior, and identify theft to acquire HECM funds without the knowledge of the senior who owns the property.
*Jonathan Foxx is the President & Managing Director of Lenders Compliance Group