It is common sense (not so common sometimes) that a poor credit history deprives one of low interest loans and associated benefits. Further, attempts to bypass problem credit is invariably resulting in fraudulent people working overtime in some ‘creative’ dossier work, generally in the real estate industry. They might ask people to make false statements on your loan paper for the sake of securing the loan. If you are not prepared to commit or be part of a loan fraud, keep of from such misadventures. To say that I wasn’t aware of such terms simply cannot bail one out of trouble. That brings us closer to the point- how to avoid loan fraud?
Before pondering over how to avoid loan fraud, let us first see what actually a loan fraud is all about. Loan fraud refers to an illegal move by a customer (or real estate agent, mortgage broker, appraiser, closing agent or attorney) forges statements with the purpose of qualifying for a loan that is greater than an amount that one actually is entitled to. Under the legal frame work,
- Any false statement submitted to the lender amounts to loan fraud.
- Credits and rebates to any person as a result of a real estate transaction should be entered in the settlement statement. The failure to do so will be considered a loan fraud.
Loan fraud occurs due to the customer’s over enthusiasm to receive a loan at a decent rate (if there is poor credit history) or due to lack of information about the whole loan issue. Ideally, in order to prevent oneself from ending up in a trap, keep in mind these simple points,
- Take time to shop around and see various schemes. If some lender or broker tells you that the only way available for you to buy a house is through a loan, avoid them instantly without a second thought.
- Don’t put pen to blank documents or those containing false information. Make sure that the cost and loan terms at closing are the same that you have agreed to earlier.
- It is advisable to watch out for interest only payments, balloon loans and steep pre-payment penalties. Be careful to mention your money requirements for unemployment, medical or debt issues to the agents or lenders.
- Don’t let anyone brainwash you to taking a loan for an amount that requires a repayment that cannot be managed normally through your means of earning.
- Get a number of quotes from multiple lenders and brokers so that you can verify if you are charged a fair interest rate based on the credit score and not anything else.
Loan fraud is an offence which can attract serious punishments as mandated by the law of the state. Hence the customer should be doubly sure while applying and receiving a loan. Also keep oneself off from somebody deceiving and talking you into a loan fraud. It is all about being sensible, smart and yes sticking to one’s values and integrity.