Identity theft can damage a person’s reputation, credit, financial health, and, in more serious cases, result in a loss of property. When a person falsely uses the identity of another individual for the purpose of taking out loans against an existing mortgage or selling their home to a buyer, the financial implications can be devastating.
How Prevalent is Mortgage Fraud Through Identity Theft?
Mortgage fraud is unfortunately quite common, and is often perpetrated by serial frauds. In one famous case from 2009, the United States State Department sought the extradition of an individual from Kingston, Jamaica who had been involved in a $10M mortgage fraud scheme. The individual, who had fled the country in 2006 after being held on state charges in Florida, was indicted in what was termed “Operation Whose House.”
In 2010, the FBI reported that the states with the highest incidents of mortgage fraud were California, Florida, New York, Illinois, Nevada, Arizona, Michigan, Texas, Georgia, Maryland and New Jersey. The financial impact of mortgage fraud was estimated at more than $10 million in 2010 and as high as over $25 million in 2006.
How Does Mortgage Fraud Happen?
Perpetrators of identity theft and mortgage fraud prey upon vulnerable individuals. A person who owes more money than the home is worth, or elderly residents looking to borrow some of the equity in their home to meet certain expenses are generally viewed as most vulnerable to theft. Identity thieves use their knowledge and expertise in finance, banking, lending and the real property laws of a particular jurisdiction to falsify documents and obtain the homeowner’s personal information to commit fraud. Oftentimes, the homeowner willingly provides the information to the identity thief.
Armed with the necessary personal data — date of birth, social security number, etc. — a thief can easily produce false documents to transfer ownership, initiate a sale, or enter into loan arrangements, using the home as collateral.
Ways to Safeguard Information and Prevent Yourself From Becoming a Victim
There is an old adage that goes, “if it sounds too good to be true, it probably is.” Much of the mortgage fraud that takes place involving identity theft relies on the victim placing an undue amount of trust in an otherwise unscrupulous individual. One of the more basic ways in potential victims of identity theft and mortgage fraud can protect themselves from being victimized is by verifying the credentials of any professional they work with.
Personal information should only be provided to a trusted or reputable individual or organization. A local or state consumer protection bureau — such as the Better Business Bureau — or a local chamber of commerce can be helpful resources in vetting the qualifications of a financial or mortgage professional.
Additionally, if at any time you feel pressured into signing a document, or if you do not understand the language in a document being presented for signature, do not sign. You should also periodically check your credit statement and report erroneous items to the authorities immediately.
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