The rate of mortgage fraud has declined over the last decade, as per the United States Sentencing Commission. In fact, the most recent report, dated August 2022, indicates that the number of mortgage fraud offenders has gone down by 69.9% since the 2017 fiscal year. While this is a positive report, the commercial mortgage fraud scheme is still active, so you should watch out for potential scams and evade them.
What is Mortgage Fraud?
It refers to obtaining a mortgage loan through falsifying information. This may involve:
- providing false information
- omitting crucial information
- presenting falsified documents for underwriting purposes
Mortgage fraud may also involve lenders giving misleading information to borrowers for financial gain.
Quick Ways to Identify Mortgage Scams
Although the rate of mortgage fraud has significantly decreased, the risk has increased by over 12%. To give you an idea, one in every 109 mortgage loan applications has signs of fraud. This shows that you could become the victim of mortgage fraud if you don’t watch your steps.
You could be staring at a mortgage scam if:
- Your bad credit doesn’t seem to affect your ability to get the loan
- The lender is willing and ready to falsify information in your favor
- The loan costs are higher than normal
- The lender does not consider your ability to repay the mortgage loan
- The lender doesn’t give you the option to purchase points
Tips to Avoid Commercial Mortgage Fraud
For every dollar you lose to fraud, your business stands to lose $4.40 or more. Thankfully, you can avoid commercial mortgage fraud by
- Only engaging professional, reputable, and licensed commercial real estate mortgage lenders
- Signing documents only when you fully understand and agree to the information written in them
- Investigating the history of the property you intend to purchase, just in case it has been sold multiple times in a short time
- Understanding all the terms stipulated in the loan application
- Researching the mortgage lending market to understand the costs and interest rates
- Being suspicious of any promise that sounds too good to be true
Mortgage lenders are also at risk of losing money to fraudulent borrowers. If you’re a lender, avoid mortgage fraud by:
Have Questions About Commercial Mortgage Fraud? We Have You Covered!
While no one wants to get caught in a mortgage scam, ignorance can make you an easy target. Ask Fidelity Mortgage experts for any mortgage-related questions or any doubts. With decades of experience in the industry, we can help you make informed decisions regarding mortgages.
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