9 mortgage scams you need to know about

What is mortgage fraud? Mortgage fraud refers to lying or omitting information to fund or insure a mortgage loan. It results in billions of dollars in annual losses nationwide.

In 2021, fraud risk increased 37% over 2020 levels, CoreLogic found, and the fraud rate averaged 1 in 120 loans — 1 in 23 for investment purchases.

Medium Brush Stroke

Property Flipping

A property is purchased below the market price and immediately sold for profit, typically with the help of a shady appraiser who puffs up the value of the property. This is illegal.

Equity Skimming

An investor may use a straw buyer, false income documents, and false credit reports to obtain a mortgage loan in the straw buyer’s name.

Asset Rental

You “borrow” the asset, maybe a hefty chunk of cash, and after the mortgage closes, you give it back to your partner in crime.

Inflated Appraisals

They can undervalue the property so that a buyer gets a “deal,” or more often, they overstate the value of the property. The goal is to help a buyer or seller, or a homeowner planning to refinance or tap home equity.