Beware! Mortgage Broker Fraud
So you're thinking of buying a house? Fantastic! Settling down and creating a home is one of the most exciting times in your life. However there is no need to be blinded by sentiment or wrapped up in the thrill of getting your house when it comes to spending your money. The cold hard fact of the matter is that a mortgage is a huge financial commitment for you and will undoubtedly be the biggest expenditure of your life. It is as such a stressful experience, particularly if it is your first time. One thing that you certainly do not want to fall victim to is mortgage broker fraud.
What is Mortgage Broker Fraud?
A mortgage broker is someone who sells mortgage loans to you on behalf of a lending institution, such as banks or mortgage companies. In the old days you would deal directly with the loan company, but now in the United States and indeed across the world it is much more likely that you will deal with a mortgage broker who acts as an independent middleman.
There are two types of fraud that a mortgage broker could involve you with. Firstly there is mortgage fraud. This is when you submit false information in order to improve your chances of being accepted for a mortgage. Secondly there is predatory mortgage lending, where you broker intentionally misleads or straight out deceives you. This can take many forms, such as falsifying information important to your application, failing to provide you with all the necessary information you require before signing on the dotted line, convincing you to take out a loan that does not benefit you in the slightest, persuading to take out a higher loan than you actually require and capitalising on a borrower's lack of knowledge for their own financial gain.
How to Avoid Fraud
If all this sounds scary then good, you are on your guard. But there is no need for sleepless nights. There are several measures you can take to ensure that your mortgage lending does not have to be risky. Always make sure that you always deal with a licensed professional. Try as best as you can to get references and go to someone that you have heard good things about. If your mortgage broker insists on pushing one company, then something is definitely starting to smell a bit fishy. Remember also to get a second opinion on the advice you have been given. If you are taking out a mortgage make sure the valuation is in keeping with other houses in the locality and also reasonable for the property you are interested in.
As far as being the victim of mortgage fraud goes, so long as you are careful and vigilant you should avoid this without too much trouble. If your mortgage broker recommends that you sugar your application a little, don't. It is a criminal act and could wind you up in a lot of trouble. Instead treat this as a bad sign regarding the ethics of your broker and do not do any more business with them! Also, be sensible. Don't sign any blank forms and make sure anything you set your John Hancock down on you actually understand. Ask an attorney, ask a friend, ask anyone to explain it to you if you don't fully understand.
No Reason to Panic
In short just keep your wits about you! There is no reason to expect that you will be the victim of mortgage broker fraud as the majority of brokers working on your behalf with mortgage companies are honest professionals interested in getting you the best deal they can. Reading all your mortgage lending documents can be quite boring but it is important. So stay alert, keep your wits about you and enjoy your brand new home!