Quick Answer
Mortgage fraud tools are safeguards designed to help homeowners detect, monitor, and respond to suspicious mortgage-related activity. These tools focus on early awareness of unusual filings, loan activity, or record changes so homeowners can address potential fraud before it causes financial loss, credit damage, or ownership complications.
Table of Contents
Mortgage Fraud Tools
Mortgage fraud tools play an important role in protecting homeowners from fraudulent loan activity, identity misuse, and unauthorized filings tied to their property. Mortgage fraud can involve falsified loan documents, forged signatures, or loans taken out without a homeowner’s knowledge, and the Federal Bureau of Investigation (FBI) has long identified mortgage fraud as a persistent financial crime that affects both lenders and property owners.
Consumer protection agencies such as the Federal Trade Commission (FTC) warn that mortgage-related fraud often overlaps with identity theft, foreclosure scams, and title manipulation. Because many mortgage and property records are filed publicly and processed without prior owner notification, fraudulent activity can go unnoticed unless homeowners actively monitor changes tied to their property.
Mortgage fraud tools are designed to close this visibility gap. By helping homeowners track mortgage-related filings, liens, and ownership records, these tools provide early warning signs that allow issues to be investigated and corrected before they escalate into serious financial or legal problems.
What is Mortgage Fraud
According to the Federal Bureau of Investigation (FBI), mortgage fraud is considered to be a sub-category of Financial Institution Fraud and is a “Crime characterized by some type of material misstatement, misrepresentation, or omission in relation to a mortgage loan which is then relied upon by a lender. A lie that influences a bank’s decision—about whether, for example, to approve a loan, accept a reduced payoff amount, or agree to certain repayment terms—is mortgage fraud.” This type of fraud can be committed by either professionals in the real estate industry or individuals. For example, in California, seven people were convicted for mortgage scams totaling $10 million, followed by 12 individuals being arrested on 133 felony counts for operating a mortgage fraud/loan scheme over many years.
Types of Mortgage Fraud
The FBI breaks mortgage fraud into two categories:
- Fraud for housing: representing illegal actions by a borrower to gain or maintain ownership of a home while using such fraudulent information as misrepresented assets, appraised values, and/or income
- Fraud for profit: prioritized over fraud for housing, fraud for profit usually involves industry insiders such as attorneys, bank officers, and mortgage brokers who manipulate mortgage lending to steal equity and/or cash from homeowners
The financial services company, CoreLogic, states one in 123 mortgage applications contain signs of fraud including incidents falsely reflecting assets/liabilities, credit issues, income misrepresentation, and monies available for down payments.
The FBI Warns These Property Fraud Schemes Could Affect You
Here are common mortgage scheme fraud scenarios that all homeowners need to be aware of according to the FBI:
- Air loans: an air loan is taken out with no collateral on a nonexistent property using fake information throughout the mortgage application process
- Builder bailout/condo conversion: this occurs when builders seek out buyers who receive a loan for a property but then allow it to slip into foreclosure; with condo conversion, developers with an excess inventory of condos establish fake buyers who receive cash-back incentives while inflating the condo’s value to get higher prices at closing
- Commercial real estate loans: this can involve a bogus lease, appraisals, and cash flow to falsely manipulate the appraised value of the real estate
- Equity skimming: a straw buyer falsifies documents and credit reports to get a mortgage, which is then transferred to an investor upon closing, who subsequently doesn’t make payments and rents the property until imminent foreclosure takes place
- Foreclosure rescue schemes: usually occurs when a homeowner is just about
to default on their mortgage and is advised they can keep their homes by transferring ownership to an investor who then defaults on the mortgage perpetrators recruit elderly borrowers to convert the equity in their home into cash, which scammers keep, knowing that the fraud won’t be discovered until the homeowner discontinues living in their primary residence property is bought, appraised higher than it should be, and then sold renegotiating mortgage lending terms for large upfront fees seller through a non-disclosed second mortgage, whereby the lender believes the borrower has provided their own money for the down payment
Loan modification: criminals offer assistance to delinquent homeowners by
Silent second: this occurs when a buyer obtains a down payment from the
Illegal property flipping: using fraudulent information across the board, a
Home equity conversion mortgage: this is a reverse mortgage scam whereby
The Threat is Real & Your Equity is at Risk
Think it can’t happen to you? Think again. The FBI notes that almost $2 billion in properties were recently stolen in one year alone through title and housing fraud. And if it’s not you, chances are good that property fraud has occurred to someone you know such as an elderly neighbor, a family member, or a friend. Check out some of the latest property fraud news & videos here.
What’s the Solution to Mortgage Fraud
It’s simple: protect your home and equity proactively with HomeLock™ home title protection monitoring. While basic mortgage and property fraud services alert you to problems after the fact, HomeLock™ proactively scans and monitors 200+ data points including:
- daily property address monitoring
- fraud detection for land, lot, and parcel
- MLS listing websites
- property rental websites
- purchase and sale websites
- social media websites
Why is HomeLock™ the #1 rated property fraud protection system?
HomeLock™ uses real technology to provide real homeowners with real protection for a very real problem! HomeLock™ has unique features including:
- an early warning protection system that alerts before, during, and immediately after fraud or errors occur; this even includes missed payments, unpaid bills, or clerical errors at the county level
- fraud resolution services including $25,000 in legal services for fraud defense and a $1 million Cyber Insurance Policy, along with 2 hours of assistance from our dedicated HomeLock™ Fraud Protection team
- HomeLock™ includes our award-winning Homeowner Enablement Platform designed to save you time and money by providing actionable tools and features
- a 7-year title scan history report
Secure your home and property with HomeLock™ today!
Take Control of Your Homeownership Journey with DomiDocs®
Managing your home shouldn’t be stressful. DomiDocs® empowers homeowners with innovative technology, expert guidance, and unparalleled organization—all within a secure, cloud-based platform. From protecting your property and finances to streamlining essential tasks, our tools help you save time, reduce expenses, mitigate costly risks, and maximize your home’s value.
Explore the DomiDocs® suite of solutions:
- Homeowner Enablement Platform® – A centralized, digital hub for organizing documents, tracking home value, and managing property details effortlessly.
- HomeLock™ – Protects your home from fraud and title theft with 24/7 monitoring and instant alerts.
- TrueValueIndex® – Provides real-time insights into your home’s value to help you make informed financial decisions.
- propRtax® – Identifies potential property tax savings and ensures you’re not overpaying.
- Documenting for Disaster® – Securely stores critical homeownership documents, ensuring quick access before and after a disaster.
Join the home management revolution today and experience the confidence that comes with having everything you need in one place.
FAQ
What Is Mortgage Fraud?
Mortgage fraud occurs when false or misleading information is used during a mortgage process to secure a loan, alter loan terms, or misuse a homeowner’s identity or property. This can affect both lenders and homeowners and may result in financial loss or legal complications.
How Does Mortgage Fraud Affect Homeowners?
Mortgage fraud can lead to unauthorized loans, unexpected liens, damaged credit, or ownership disputes. In some cases, homeowners may not realize fraud has occurred until they receive unfamiliar loan notices or discover changes in public property records.
What Are Common Signs of Mortgage Fraud?
Warning signs include loan statements from unfamiliar lenders, unexpected changes to mortgage terms, notices of liens you didn’t authorize, credit report discrepancies, or recorded documents you do not recognize or remember signing.
Can Mortgage Fraud Happen Without My Knowledge?
Yes. Mortgage fraud can occur without a homeowner’s direct involvement, especially when identity theft or forged documents are used. Because many mortgage and property filings are recorded publicly, changes can take place without immediate notification to the owner.
How Can I Protect Myself From Mortgage Fraud?
Protecting yourself from mortgage fraud starts with reviewing loan documents carefully, monitoring your credit, and staying informed about changes tied to your property. Using monitoring services like HomeLock™, powered by DomiDocs®, can help homeowners stay aware of mortgage-related filings or record activity that may signal fraud.
What Should I Do If I Suspect Mortgage Fraud?
If you suspect mortgage fraud, contact your lender immediately, review your credit reports, and consider speaking with a qualified attorney or financial professional. Acting quickly can help limit financial damage and make it easier to correct fraudulent records.
Why Is Early Detection Important With Mortgage Fraud?
Early detection makes mortgage fraud easier to resolve and helps reduce long-term consequences such as credit damage, legal disputes, or complications when selling or refinancing a home.