The news from the real estate sector shows that foreclosure fraud has been increasing. Facing foreclosure can be a daunting prospect for people in trouble with their mortgages, especially when they are unsure of what to do. Foreclosure fraud comes in different forms, but here are a few common types and ways they can detect.
Loan modification: this fraud occurs when the company offers help to desperate homeowners trying to help them renegotiate mortgage of sometimes even promise that they can prevent a foreclosure on your home. In most cases, these scammers require large fees and normally give unfavorable terms for the homeowners.
Foreclosure rescue: These scammers mainly identify homeowners who are at risk of defaulting on their mortgage loan or homeowners who are in foreclosure and then misled them into believing they can save their homes by transferring the deed or putting the home in the name of an investor. They sell the home to any straw buyer creating equity using a fraudulent appraisal and stealing the fees paid by the homeowner.
Inappropriately acquiring ownership of foreclosed houses: Most houses with pending foreclosures or are in default are normally vacated by the homeowners. The main foreclosure scam here is the use of forged quit claims deed to make it look like the company owns different foreclosed properties. These properties are then issued out to new tenants.
Illegal property flipping: in this case, the home is purchased and then appraised for a high number, and the sold quickly. The main scam here is the false information provided in the exchange. This scam mainly includes false loan information, fraudulent appraisals, or inflated buyer income.
Combating Foreclosure fraud
There are various federal and state laws used to minimize foreclosure fraud. Many states currently have gone a step ahead to require loan officer licensing and more awareness. More so, the government requires licensing of real estate and title agencies. Many states monitor the compliance of lending companies by mandating frequent auditing done.
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