The Internal Revenue Service has issued a report titled "Real Estate Fraud Investigations" and reports a 100% increase in investigations between 2001 and 2003 and prison terms that almost doubled in that same time period, reports The Mortgage Fraud Blog. Some of the common schemes on the IRS watchlist include:
• “Property Flipping” — A buyer pays a low price for property, and then resells it quickly for a much higher price. While this may be legal, when it involves false statements to the lender, it is not.
• Two Sets of Settlement Statements — One settlement statement is prepared and provided to the seller accurately reflecting the true selling price of the property. A second fraudulent statement is given to the lender showing a highly inflated purported selling price. The lender provides a loan in excess of the property value, and after the loans are settled, the proceeds are divided among the conspirators.
• Fraudulent Qualifications — Real estate agents assist buyers who would not otherwise qualify by fabricating their employment history or credit record.
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