Mortgage Fraud Threatens Homebuyers in Georgia: Deceptive Schemes and Red Flags to Watch For

In the vibrant real estate market of Georgia, mortgage fraud has emerged as a significant threat. This type of financial deceit harms neighborhoods, damages credit ratings, and results in massive financial losses. To shield yourself from these fraudulent schemes, it is crucial to verify the legitimacy of your dealings, particularly with mortgage loan originators, mortgage brokers, or mortgage lenders.

Protect Yourself from Mortgage Fraud

1. Verify the legitimacy of your mortgage professionals: Ensure they hold a valid license from the Georgia Department of Banking and Finance. Exempt entities, such as banks or credit unions, do not require licensure.
2. Ask questions and avoid susupicious activities: Be cautious of any requests to sign documents containing false statements. Instead, report all issues to the Georgia Department of Banking and Finance.
3. Report suspected mortgage fraud: Georgians can report suspected mortgage fraud to the department at https://www.gabl.georgia.gov/Consumers-Investors/Mortgage-Consumer-Protection/Report-Mortgage-Fraud. Reports can also be submitted to the United States Department of Justice through their website.

Common Mortgage Fraud Schemes in Georgia

Manipulated Property Values

• Inflating property values for larger loans
• Manipulating appraisals to secure larger mortgage loans for “straw borrowers”

False Documents

• Submitting deceptive invoices
• Coercing straw borrowers or investors to forge documents
  • Counterfeit driver’s licenses
  • Pay stubs
  • Tax returns
  • W-2 forms
  • Rent checks
  • Mortgage documents

False Representations

• Dishonest lenders providing false down payments
• Promising investors that rental income would cover mortgage payments, while no lease or agreement exists

False Assignments and Deeds

• Filing false documents to eliminate legitimate lenders’ security interests
• Giving control of properties for fraudulent loans

These are just some of the illegal schemes that mortgage lenders, brokers, or originators might employ. To safeguard yourself from mortgage fraud, consider the following recommendations:

1. Seek referrals from trusted friends and family for mortgage lenders and brokers.
2. Educate yourself about the mortgage process using public resources such as state and federal agency websites and brochures.
3. Request loan information from several lenders, brokers, or financial institutions.
4. Don’t hesitate to inquire about loan terms, conditions, or other aspects.

Fannie Mae’s website also provides valuable information on common mortgage fraud schemes and red flags. Stay informed and protect yourself from potential mortgage fraud schemes in Georgia.