Mortgage fraud Scams
First Published: January 10, 2010 ADawnJournal.com
With a mortgage being a simple transaction between an individual and an institution, with so much of the information locked in for both parties, it would seem difficult for mortgages to be open to fraud. And yet, it clearly is because there are an increasing number of potential mortgage scams that are putting householders out of pocket and in some cases out of their homes. The difficulty of targeting mortgage fraud is that fraud, to be successful, needs to be carried out by individuals with a large degree of cunning. If they are cunning enough to pull off a successful mortgage scam, they are certainly clever enough to operate undetected for a considerable period of time. There are other reasons that a fraudster may pass undetected, though.
For one thing, there appears to be a lack of due diligence taking place when it comes to mortgage applications, and this is allowing all sorts of initiatives by the fraudsters to take place. In one example half a decade ago, a couple living in a condo in Toronto found that they had been the victims of a scam which had seemingly resulted in their condo being mortgaged in their name and then sold out from beneath them. This had been achieved because the scam artists had managed to gather together enough real-looking fake documents to back up their story. A cursory check of the documents and a few questions later, and the fraudsters were walking away with a million dollars.
In many cases the fraud which is committed – and which the individuals have escaped from scot free – could be prevented with something as simple as a visit from the bank to the people whose name and address is on the documentation. Someone showing up at their door saying “I’m here to value your house for the remortgage you have applied for” would raise alarm bells instantly that the householders had been victims of identity theft. Mortgage scams, and any other mode of fraud, however, are probably crimes to which their will never be a complete antidote, as fraudsters are generally resourceful, resilient individuals. As soon as a loophole is closed, another opens.
Mortgage fraud never used to be such a problem, due in no small part to the fact that to take out a mortgage it was once necessary to attend the lending bank in person in order to sign the necessary documents and supply all the identification needed. These days, with the Internet and telephone playing such a large part in application processes, this is no longer the case, and it has ironically made mortgage fraud easier to commit in a supposedly security-conscious age.
Of course, there are other cases where the person taking out the mortgage really is who they say they are, and they do intend to use the money to buy a house. The problem is that they use incorrect information and occasionally direct lies in order to secure better terms on a loan – a loan which, due to their income, they generally cannot afford to pay off.