Bradenton Homeowners: Beware The Phantom Buyer
Mortgage Fraud Series #2
I am writing a series of posts about mortgage fraud and how we can protect ourselves from it. Fraud thrives in two kinds of market. The first is a hot market when prices are rising fast. Scammers find it easy to inflate appraisals and strip properties of equity. The second is a declining market, where sellers are frightened. Scammers play on these sellers, sometimes drawing them into a mortgage fraud scheme.
The Phantom Buyer
By increasing numbers, people are receiving notices of default on their mortgage. However they are alleging they did not purchase or mortgage the subject property. In many cases it is revealed that the identity and credit score, of the person was assumed by another. They have fallen into the Phantom Buyer scheme.
These transactions often take one of two forms:
1. Seller creates a phantom buyer. In this scenario the Seller will inflate the value of the property and will offer an accomplice a sum of money to impersonate a person with good credit. They enter into a bogus contract and close at the inflated price.
Sometimes a mortgage broker is involved. The broker may use the identity and credit of a real person whose offer on another property did not close.
2. Third party creates a phantom buyer. In this scenario a Seller is offering a property for sale and a buyer offers to pay more than asking price if settlement includes payments for unperformed services or unrecorded mortgages. The Buyer takes title in the name of an individual with good credit. The Seller doesn’t realize he has been involved in a scheme to defraud the lender.
Most Phantom Buyer schemes do not happen in transactions involving a Realtor. However, in today’s world, Realtors may never meet the Buyer face to face. Transactions can be conducted by email or overnight packages. Therefore, it is important that Realtors KNOW their Buyers and Sellers. Otherwise the Realtor may find himself/herself drawn unwittingly into the scheme.
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Please contact me, Dan Forbes, a call if you have questions about or our Bradenton, Florida real estate market at 941-746-0505; toll free 877-646-8326. Visit my web site BradentonFloridaRealEstate.com and my blog The Real Estate ZOO.
