Thursday 15 - Mortgage Fraud to Watch For Question: Can you tell me some of the common types of mortgage fraud to watch out for? Answer: Mortgage fraud is nothing more than steps deliberately taken to deceive a lender, usually through unjustified income and employment claims. The catch is that such claims are sometimes made without the knowledge of the borrower. The best way to avoid mortgage fraud is to take four steps. First, speak with local real estate brokers and ask them to recommend lenders who keep their promises regarding rates and terms -- and who deliver promised funding by closing. Second, finance with an FHA- or VA-backed loan. They have tough underwriting standards that discourage funny business. Third, always make sure that the person selling the property is actually the owner. Ownership can be demonstrated by looking at tax records, doing a title search or checking the latest tax bill. Fourth, use your own experts. Have a buyer broker, get a professional home inspection and do not allow the seller to select the lender or settlement provider. Instead, find your own lenders and settlement provider before you enter the marketplace and get pre-approved for financing before making an offer.

Published: May 15, 2008

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