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What is fraud with home equity?

Home equity fraud is a type of real estate fraud. Real estate fraud occurs when one party intentionally uses misleading information or makes a false representation of real estate. There are many different kinds of real estate fraud, such as recording fake real estate documents, fraud by mortgage foreclosure consultants, and fraud in home equity sales contracts.

When someone tries to take a homeowner’s equity in their home, they commit home equity fraud.

When the government takes a person’s entire property, including their equity, to pay an unpaid property tax debt of any amount and refuses to return the balance once the tax debt is paid, this is called “home equity theft.”

Now is the time to start checking your home equity line of credit (HELOC), if you haven’t done so in a while. Through stealing home equity and defrauding lenders, thieves can gain access to these accounts and siphon off thousands of dollars.

Vacation homes, rental properties, and other vacant homes are frequently the targets of these con artists. However, there have been instances in which such a con was carried out while the house’s legitimate owner was still living there. In either case, once they locate a target house, they check public records to determine who owns it, and that individual becomes the victim of the identity theft. 

These criminals basically gather information about your identity from a variety of sources. They might be able to do this with information they find on social media, tax returns, stolen pay stubs, stolen bank records, or even information they get from phishing scams, even though this usually happens online. Even though they can’t usually fool you with just one piece of personal information, they can do a lot of damage when they get your address, date of birth, and social security number. 

The criminal will use your identity and forge signatures, just like they did with credit card fraud, to get what they want. However, rather than opening a credit line, they use this disguise to forge the necessary paperwork to give the impression that they (or a third party) now own the property. 

The real trouble begins when they have these fake documents. They will frequently make use of this to try to sell your house and entice potential buyers with attractive offers. They might also try to use the property as collateral for a loan, like a second mortgage, by using the fake title. 

The criminal activity that combines elements of identity theft and mortgage fraud is referred to as “house stealing,” “deed theft,” “deed fraud,” and “title theft.” It involves a criminal stealing your identity and forging title or deed documents to “sell” it to unsuspecting buyers or to borrow against it.

However, criminals cannot actually “steal” your deed or your house, so these terms are somewhat misleading. They are forging those documents, so they never legally acquire your deed or your home. Having said that, a fake deed can cause a significant amount of harm.

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