Owning a home plays a big role in attaining the American Dream. Without this essential piece of the pie, people feel they have not yet succeeded. Owning a home allows people to customize their space how they see fit while adding equity to their assets. Is it worth fraud though? A surprising number of Americans provide inaccurate information on home loan applications to secure a roof over their heads and it is on the rise.
CNBC reported that the risk of mortgage fraud climbed by 12% every year in the second quarter. People who apply for mortgages are more likely to commit this type of fraud than people who apply to refinance an existing mortgage.
There are several contributing factors. Among them are stricter loan requirements put in place after the real estate market brought down the economy in 2008. Another reason is the steady increase in the cost of buying a home in America. Here are some of the most common instances of fraud that lenders encounter:
- Credit repair
- Income falsification
- Undisclosed real estate liabilities
- Down payments from questionable sources
MarketWatch adds that some people commit more deliberate forms of mortgage risk. This tends to focus more on profit than putting a roof over their heads. One example is to inflate the value of a property, often through illegal flipping strategies. Another common option is to use loans intended for primary residences to purchase income properties. This helps the person to take advantage of lower down payment requirements and interest rates.
Whichever camp an individual’s actions tend to fall into, one thing is certain. If they are convicted, it could end all the possibilities for them to present themselves as an honest and employable person. They might even lose professional licenses or get banned from specific professions altogether. This is why people accused of mortgage fraud ensure they put up a strong fight.