Common sense and paying attention to details are the two most effective steps borrowers can take to protect themselves and their families from being victims of, or accomplices to, mortgage fraud.
There are a number of things that all borrowers should be aware of when shopping for a mortgage. It is critical to question potential lenders about the details of a mortgage and if the answer doesn't make sense, that's a reason to be skeptical.
Here are a number of tips provided by reputable bankers, financial planners and lawyers.
If something is too good to be true, it probably is
New opportunities with amazing prospects may mean that there is a catch somewhere. And all too often, there is. This is where common sense plays a particularly important role.
If a mortgage plan seems too complicated, it probably is. Often the most simple plans and opportunities yield the best and most optimal results.
Choose your mortgage broker carefully
A house may be the biggest purchase a borrower will ever make. So engage in detailed research before a decision is made. Shopping by low rate is important but brokers who work with respected names in the business should also be considered.
Particularly at time of economic upheaval, researching the relative health of a mortgage lender is recommended, even if the U.S. government guarantees your loan. Working with a broker who comes with good recommendations and provides excellent service is also advisable..
Don't lie on your paperwork
Beware of unscrupulous professionals who try to coerce you into fibbing on your documentation. Be open and honest. You could be held accountable, even though you relied on their advice.
Don't be a victim of greed or false hope
It doesn't make sense for a borrower to purchase a house that appears to be beyond their means, no matter what a mortgage lender says they can afford. Homebuyers should remain in control of their situation as a way to keep potential fraudulent predators away.
Study the market and arm yourself with a minimum amount of knowledge
Borrowers should arm themselves with mortgage basics, home sales comparisons and a trustworthy agent. By doing so, it'll be tough for dishonest individuals to take advantage of them. Knowledge is power.
Advice from the FBI
The FBI also has provided several tips for prospective homeowners. Its website recommends that referrals be sought out for trustworthy real estate and mortgage professionals. Other tips from the FBI include:
Beware of "no money down" loans. Though these may work for people with stable jobs and good incomes, they can also be a gimmick used to entice people into buying a home they really can't afford.
Never sign a blank document or a document containing blank lines. Borrowers should be sure to read and review all loan documents signed at closing. When in doubt an attorney can review any documents before they are signed.
Never sign over the house deed "temporarily" for a fee to anyone, even if a foreclosure is possible. The homeowner may not only lose the up-front fees, but the perpetrator often turns around and sells the house out from under the owner.