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Exploring the Need for Real Estate Fraud Insurance
Posted on: October 19, 2015 by Newmark Insurance
Unfortunately, due to past real estate schemes, today’s agents are more vulnerable to accusations of fraud. Such schemes include loan sharking, identity fraud, etc. As these scenarios can devastate individuals and businesses alike, it is important to maintain Real Estate Crime and Fidelity Insurance to protect the company from loss and litigation.
As federal investigators have pinpointed an increase in this unlawful activity, real estate professionals are advised to take extra care in their practices. Some common schemes include the following:
Property Flipping- While this is technically a legal practice, it is important for buyers who purchase homes for a small amount, then revamp them to sell at a higher cost, be diligent and truthful when providing lenders with financial statements. Real estate agents who are managing the sales of these homes should be mindful of this and ensure proper documentation.
Settlement Disagreements- According to the Internal Revenue Service, this occurs when one settlement statement is prepared and provided to the seller accurately reflecting the true selling price of the property, then a second fraudulent statement is given to the lender showing a highly inflated price. When the loan is distributed, the excess funds are divided among the conspirators.
Fraudulent Qualifications- This scheme involves agents forging credit and income documentation in order to help qualify a buyer who would not otherwise meet the requirements for the sale. As this has historically occurred, real estate agents are more likely to be accused of this.
In addition, real estate agents are lawfully obligated to report any forgery of recorded documents, ensure the buyer is not committing identity theft, and guarantee a proper, ethical sale is completed with each client.
At NewMark Insurance Services, we are dedicated to protecting real estate businesses like yours. With our expert knowledge of the field, in combination with our competitive solutions, we’ll find a solution that’s best for you. To learn more about our operation, contact our knowledgeable specialists today at (855) 777-6549.