Beware of the wolf in sheep’s clothing, promising to make home ownership dreams come true.
April 30, 2007 (Press Release) --
Beware of the wolf in sheep’s clothing, promising to make home ownership dreams come true – especially if you’re strapped for cash or wishing to be charitable while also trimming your tax bill when selling a home. Mortgage fraud is on the rise, according to the Federal Bureau of Investigation (FBI), with reported cases quadrupling from 4,225 reported cases in 2001 to over 17,000 last year.
There are several tactics used when perpetrating home buyer and seller fraud. Common scams involve such characteristics as:
• Creating an illusion that by using their services, you will receive a larger-than-average tax deduction.
• Over-inflating housing prices and then offering kick-backs of cash;
• Convincing you that you can afford a more expensive home than you really can, which increases property taxes, their commission, and the amount you need to borrow;
• Addition of extra charges, credit insurance, encouragement to borrow more money, offers to refinance, or an interest-only payment structure with an often shocking “balloon” payment at the end (where you need to pay the entire original cost of the home at once or lose your home);
• Presenting one loan structure when selling you the loan, but then substituting different, less than advantageous terms when signing;
• Asking you to prepare a tax return showing higher income or fewer deductions than you really have. Don’t do it!
According to Kevin C. Huston, enrolled agent with Blue Ridge Tax Advisors Inc. in Asheville, NC, "It is common for the ultimate mortgage-holder to request copies of the tax returns you filed with the IRS. If these numbers differ from the tax return you used when applying for a loan you could end up in jail for either mortgage fraud or for tax fraud. The mortgage-holder will have already been paid their commission, so don't expect them to defend you," added Huston.
Not only do these scams often put the buyers in over their head financially and cause many to later lose their homes, but one type of scam leads sellers to believe they will receive increased tax deductions because they worked through a “charitable” organization.
It is important you have trusted asvisors in attorneys, bankers, and accountants. Contact Farrow & Associates, LLC for all your business and personal accounting needs (262-251-5661). Farrow & Associates has been a trusted advisor in Wisconsin for over 25 years.
There are several tactics used when perpetrating home buyer and seller fraud. Common scams involve such characteristics as:
• Creating an illusion that by using their services, you will receive a larger-than-average tax deduction.
• Over-inflating housing prices and then offering kick-backs of cash;
• Convincing you that you can afford a more expensive home than you really can, which increases property taxes, their commission, and the amount you need to borrow;
• Addition of extra charges, credit insurance, encouragement to borrow more money, offers to refinance, or an interest-only payment structure with an often shocking “balloon” payment at the end (where you need to pay the entire original cost of the home at once or lose your home);
• Presenting one loan structure when selling you the loan, but then substituting different, less than advantageous terms when signing;
• Asking you to prepare a tax return showing higher income or fewer deductions than you really have. Don’t do it!
According to Kevin C. Huston, enrolled agent with Blue Ridge Tax Advisors Inc. in Asheville, NC, "It is common for the ultimate mortgage-holder to request copies of the tax returns you filed with the IRS. If these numbers differ from the tax return you used when applying for a loan you could end up in jail for either mortgage fraud or for tax fraud. The mortgage-holder will have already been paid their commission, so don't expect them to defend you," added Huston.
Not only do these scams often put the buyers in over their head financially and cause many to later lose their homes, but one type of scam leads sellers to believe they will receive increased tax deductions because they worked through a “charitable” organization.
It is important you have trusted asvisors in attorneys, bankers, and accountants. Contact Farrow & Associates, LLC for all your business and personal accounting needs (262-251-5661). Farrow & Associates has been a trusted advisor in Wisconsin for over 25 years.
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