Mortgage Scams
This week we are going to dive into a concern we are starting to see, which is why we want you to understand the risks as much as possible. With money stresses, recessions looming, and technology at the highest level it has ever been at, scammers are getting trickier with their methods.
It is understandable that with the rising interest rates, it can be harder to qualify for a mortgage at this current time. That being said, do not try to take any alternative routes to qualify for a mortgage. There can be serious consequences and we want you to be aware that some of these methods are becoming more popular.
Recently, real estate agents were caught offering solutions to people who cannot qualify for a mortgage within a particular price range.
How does this scheme work?
The scheme itself involves connecting the hopeful buyers with fabricated documents showing fake employment, salaries and tax filings, so buyers can obtain loans they would not otherwise qualify for. This would be considered a backdoor approach to getting approved for a mortgage and is very much illegal.
Why are we telling you this?
Unfortunately, for some, this fraud type is a lucrative business. Real Estate agents say the teams charge one percent of the mortgage amount for the fabricated mortgage application. This means that in addition to the 1-3% you pay the realtor at the end of the sale, you must add on an additional 1%.
Although this is very uncommon, we want to make sure you do not take any shortcuts or risks. You may think that the risk is on the realtor, but that is not only the case, because it is your name that is going on those forms. If caught the Realtor could be fined, get jail time and lose their license. For the consumer these fraud side doors are expensive, and just going ahead with trying it can cost thousands of extra dollars which you are likely to lose once you get caught. Getting caught can hurt you as the consumer because now you have lost all your upfront mortgage fees and potentially other consequences are possible.
It is especially important for first time home buyers who do not already understand the system to not get caught up in a potentially illegal transaction. The best route to take is to reach out to work with a trusted realtor and team up with a trusted and reputable mortgage group. They will work towards getting you the best deal at the best rate without any loopholes. It may mean lowering the price range for your home, but it also means going to bed less stressed and knowing you made the right decision that you can respect. Money comes and goes, but inner sanity is not something you want to hurt or diminish.
We hope this blog was able to hit some key points as the consumer on why it is important to work with reputable agencies and to not backdoor the market.
Additionally, this blog is very much intended as support for realtors. It is a tough market right now and many realtors are hitting lower than average revenue targets. Not everyone can afford it and some realtors may feel they must take other steps to avoid losing this “money” that they had envisioned in their head. Do not do it, the market will eventually go up again and you will see your sales increase. Every free market goes through its ups and downs and every industry is impacted in a different way. At the current moment, the real estate industry is taking a hit and it may last a year or two.
The best thing to do as a realtor is to not rush or quick pick for money, and as a consumer it is important to know how the market works and how to properly obtain a mortgage.
The blog topic this week very much outlines some of our words in our other blogs. It is a tough time right now and the market is bound to experience some correction while the rates rise. This can cause a period of stress and anxiety, so it is important to not seek out any loopholes or quick methods to be able to get into the market.
Never feel rushed to enter the market, the timing will come when it is right for you.