Modern Types of Real Estate Fraud

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There are many specific types of real estate fraud but all are usually grouped into two kinds: fraud to get a property or fraud to make a profit. These are broken down into the following types.

Loan application fraud

This occurs when an applicant lies about his or her income or job. Even the smallest omission in the application will constitute loan application fraud.

Exaggerated appraisals

Because appraisals are an art, there’s always the human influence when it comes to appraising the value of the home. Exaggerated appraisals are often concocted by both crooked sellers and appraisers who are willing to sell a property for higher than it is actually worth.

False income

A typical example is using the number of a friend who is willing to pose as an employer. This is a serious type of fraud but can be checked by looking the number up in the directory.

Falsified credit reports

Applicants can easily edit their credit reports to make it seem like they have good credit. Omissions of statements of bankruptcy or late payment records can easily be ‘lost’ with the aid of digital technology.

Forged tax returns

Applicants can also forge tax returns using a variety of software. Background checks for the correct documents from the IRS is one way to know who has been using forged tax returns. Another kind of home loan fraud is the pretend homeowner loan fraud, where a real estate investor poses as a homebuyer looking for a primary home to get a lower interest rate and a higher loan value.