
Housing loan fraud has become more popular over time and is an important concern during economic recessions. Upheaval in the housing market, property owners facing foreclosures, as well as unscrupulous individuals looking for easy money all contribute to climates in which housing debenture frauds may happen.
The Federal Bureau of Investigation defines housing loan frauds as material misstatements, misrepresentations, or omissions relied on underwriters or lending firms to insure purchase or fund debentures. By this definition, both applicants and lending institutions can clearly remove such frauds, even though the former may not think their omissions or misrepresentations are important enough to be a significant concern. Housing loan fraud is a general term that can refer to many fraudulent activities:
- Inflating appraisals to obtain mortgages for more than what properties are worth
- Claiming assets or income borrowers do not have
- Posing as borrowers on behalf of other people who are actually making the purchases
- Pretending to provide help to economically stressed property owners to skim off equities from homes
Housing debenture and forbrukslån (consumer loan) frauds can be initiated by borrowers themselves or fraudulent lending firms, real estate agents, brokers, or individuals looking for favors. People looking to buy a property or homeowners looking to refinance can be accidentally caught up in these frauds by acting on bad advice from fraudulent lending firms or real estate agents they trust.
Understanding housing loan frauds and a list of common scams
Magicians earn huge applause from individuals by pulling animals out of their hats or performing card tricks. But people who try to pull a trick with housing debentures earn prison time. Listed below are some examples of home loan scams that happen every day.
Housing debentures are considered the largest investment most individuals will make. With all the money comes tons of temptation for criminal elements. There are a lot of scams on the market today. Some of these common types are perpetrated by agents or firms and by property owners:
Not-Accurate income
Because of the way self-employed individuals file their taxes, most of them fail to report their full income on their tax reports. Stated income loans allow borrowers to claim a particular amount, and underwriters base their lending decisions on what was stated by borrowers. If individuals inflate their income, it constitutes home loan frauds.
To know more about income statements, check out https://online.hbs.edu/blog/post/income-statement-analysis for details.

Under-the-table-exchanges
Conventional banks are reluctant to release funds to individuals who cannot prove that they have the money or financial means to make monthly amortizations. But a hefty down payment can sway a lot of lending firms’ opinions. If sellers need to dump properties, they can provide borrowers with enough funds for down payments under the table. With the funds in hand, buyers can illegally qualify for a home loan.
Owners-occupants refusing to occupy
Since lending firms tend to charge higher rates to non-owner occupants, a common scam tactic is to claim occupancy despite the fact that they do not live in that place. …