While working with mortgage brokers Newcastle NSW has a lot of benefits, there are also some risks involved if you choose the wrong broker. Also, brokers may come across fraudulent clients who may try to use false documents to acquire loans. Some of the most common fraud techniques are easy to detect if you know exactly what to look for. Nearly three-quarters of mortgage frauds involve misrepresentation and application fraud. This is marked by a variety of discrepancies.
Some of the most common discrepancies include different mailing addresses on bank statements and W-2s, the employer and borrower having the same phone number, the income given being unrealistically high for their job, the same name being signed in with different signatures in numerous places, assets being too high for the income level, homeowner’s insurance policy being a rental policy, and more. If you spot any of the above red flags, do further investigations.
Credit documentation fraud
Another set of fraudulent tactics is documentation fraud. This accounts for about two in ten mortgage fraud cases. Some of the most common credit documentation fraud signs include the paperwork of the borrower including huge differences between their new credit reports and original credit reports such as residence histories, personal data or employment histories. Another sign is when the length of the established credit of the borrower not being consistent with their age.
Appraisal and property fraud
This is another common type of fraud that mortgage brokers should look out for. This accounts for over 1 in 10 mortgage fraud cases. Some of the most common signs of this type of fraud include the property owner listed being different from the seller in the sales contract, photos of the property shown not fitting the description in the appraisal, multiple non-MLS sales being listed for comparable and inconsistencies in the type of comparable location.
Whilst you can spot a lot of discrepancies like these, the most accurate and efficient way of smoking out property fraud and appraisal scams is to use outsourced services and automated tools.
Loan package fraud
This is another common fraud you are likely to come across. Signs of fraud can be seen anywhere in the package of the loan. It is therefore important to ensure you cover all the bases and look for inconsistencies in titles, income information, asset listings, cancelled checks, sales contracts, tax returns and HUD-1 settlement statements.
Discrepancies in any of the above areas can be a red flag that something is wrong with the whole loan package. Mortgage fraud is a pandemic but you can protect yourself by taking the necessary prevention measures. You should look for tell-tale signs of fraud during loan applications, credit documentation fraud, misrepresentation fraud, and property fraud.
This will help you know most of the fraudulent applications and avoid them. Mortgage brokers Newcastle NSW, loan applicants and lenders can all fall victim to these frauds. It is therefore important for every party to be very careful and work with the right professionals to avoid these scams.
