It’s hard to believe, but there are people out there looking to prey on people’s ignorance when it comes to buying property. The mortgage fraud game is larger than you think, and every year, thousands of people fall victim to over-appraised properties, higher than normal interest rates, and loan amounts that are way more than their budget allows.
How do you know if you’re being hustled? It’s not as cut and dry as you might think, but here are some tips to help you see through the charade:
The first tip is to trust your gut. For this scam to be pulled off, you’re going to have to deal with a crooked real estate agent who points you to a piece of property, then an appraiser who will over-value the property, and then a bank officer who will validate that price. With all these dishonest people floating around, your gut should tell you something is wrong at some point. Keep your eyes open and if something starts to smell fishy (like the land they are trying to make you buy) than start asking questions.
Keep an eye out for scams like these targeting the elderly; they tend to be more trustworthy than younger people, and tend to take people at their word. These scams have also been known to target first-time buyers who don’t know how transactions like these are suppose to go.
So, how to protect yourself? Here are some warning signs to look for:
If your real estate broker demands that you use a particular lender (i.e. the lender that’s in on the scam), just say no. Tell your broker that you’ll use whatever lender or mortgage broker you want and that you’ve shopped around and you’ve chosen a different one. If your broker or agent gets a little testy at this, you might want to consider dumping them.
Another good sign that you’re dealing with less than honest people is that your lender is trying to talk you into borrowing more than what your budget allows. This is never, ever a good idea. You should go into every discussion with your lender knowing exactly what your limits are.
This one is just common sense, but make sure you get copies of everything you sign. If you don’t, demand them. Also, if you feel you’ve signed something less than honest, take the documents to a lawyer to have them looked over.
Scammers have been a part of the real estate scene for as long as there has been swampland in Florida or a bridge in Brooklyn to sell. They aren’t going anywhere (except maybe to prison) so you have to equip yourself with the knowledge of how to deal with them.