Mortgage Fraud Alert – Seller Assistance Scams
|
When mortgage fraud occurs perpetrators are exploiting and depreciating the housing market by helping sellers and giving buyers the ability to conduct property sales based on inflated appraisals. Seller assistance scams are more evident in a depressed real estate market where home sales have languished and sellers are getting very motivated. The current instability in the housing market and mortgage sector has bred an ideal environment for this particular kind of fraud. Seller assistance schemes eliminate the need for the two property transactions that are required for illegal property flipping, which involves first purchasing and then selling a property. For example:
|
A perpetrator solicits an anxious seller or his real estate agent and offers to find a buyer for the home. The perpetrator negotiates the amount that the property seller is willing to accept for the sale of the home. The perpetrator then hires an appraiser to inflate the property’s value. The property is then sold at the inflated rate to a buyer who is recruited by the perpetrator. The buyer takes out a mortgage for the inflated amount. The seller then receives the asking price for the home, and the perpetrator pockets a “service fee,” the difference between the home’s actual market value and the fraudulently inflated value. If and when the mortgage defaults, the lender forecloses on the home, but is unable to sell it for the amount owed as a result of the inflated value.