A recent complaint by a man in Gurgaon revealed home loan frauds amounting to Rs 4.79 crore involving forged property documents, according to a media report.
Bank frauds for home loans are not new within the real estate market. They keep happening now and then. “Fraudsters have been in the news for not just cheating banks but also homebuyers to opt for taking home loans. There have been shocking episodes where some people cheat individuals under the pretext of offering home loans with lower interest rates,” says Atul Monga, CEO & co-founder, BASIC Home Loan.
Several kinds of home loan fraud exist. Some of these include the likes of identity theft fraud, advance fee fraud, phishing, online fraud, and loan modification scams.
Here are the different kinds of frauds:
Identity Theft Fraud: “In an identity fraud, some other individual can avail a loan in your name and then leave you to face devastating consequences,” says Monga. Hence, identity theft is a crime involving the usage of another person’s personal or financial details to make unauthorized transactions or purchases. There are different ways to commit it and this could lead to a severe impact on someone’s credit, finances, and reputation. In such cases, often a hacker can breach the data of a person and get sensitive information such as name, bank details, and salary information from an organization.
Advance Fee Fraud: When it comes to advance fee fraud, scammers implement deceptive tactics in order to lure unanticipated victims into paying upfront charges or fees before they receive their promised loan amount. Hence, advance fee fraud is a crime where a fraudster tries to trick people into paying advance amounts such as income tax, GST fee, or processing fee, in the context of winning a lottery, a lottery, or being offered a loan. For example, in a lottery scam, the fraudsters inform the participants that they have first to pay a processing fee or a GST fee. They tell the victims to deposit the money in definite banks, and after the GST, they ask for further fees on income tax. And this is how they trap the people into this scam.
Phishing Scams: Phishing and online frauds have taken a new rise in the past decade with the digital boom. Having a strong digital presence can be both – a blessing and a vulnerability. In a phishing scam, a fraudster tries to obtain sensitive information from a person by impersonating a trustworthy entity in an online space. Since we engage in online transactions regularly, we often end up leaving behind certain particulars of our account details. Cybercriminals and scammers keep on devising new ways to trick you into divulging financial and personal information online, leading to huge losses. Often communications from fraudsters come in the way of email, text messages, or even phone calls, and they contain links to fake websites or malicious attachments. In email phishing, you might receive a deceptive email from your bank about your home loan, to trick you into revealing confidential information or clicking on malicious links.
Loan Modification Scam: In case you are finding it difficult to find a loan, there could be scamsters who may promise you a loan. Protecting your digital information and being cautious with online interactions is crucial. Fraudsters promise to modify loan terms to make them more manageable, but instead, they demand upfront fees, use high-pressure tactics, and often ask for a power of attorney. This can lead to further financial loss and legal complications.
In such scams, a fraudster might promise loan modifications wherein certain terms can be relaxed, new facilities may be provided, or interest rates may be reduced. In this case, fraudsters target individuals who are struggling to meet their loan repayments. These culprits are always ready to exploit this susceptibility through deceptive loan modification scams. “In this kind of fraud, imposters end up demanding upfront fees, offer guarantees of immediate results, engage in pressure tactics, and also often request signing power of attorney,” says Monga.
How To Stay Safe
However, there are some simple things you can do to steer clear of such fraud. We take a look.
Investigate The Lender: It is essential to do a thorough investigation of the lender to avoid loan scams. “This involves verifying if the lender is verified by the Reserve Bank of India or other regulatory authorities, confirming their contact information, researching testimonials and complaints from past clients, and visiting the lender's official website to gather information on loan options, fees, and interest rates,” says
Pramod Kathuria, Founder and CEO of Easiloan, a digital home loan marketplace.
When choosing a lender you can always go with your bank or a RBI-authorised non-banking financial company (NBFC). Whatever the loan terms are, do not take loans from a lender you are hearing of for the first time.
Verify Loan Documents: It is crucial to verify the accuracy of loan documents to avoid fraud. Before signing, borrowers must carefully review all loan agreements to ensure a complete understanding of all terms and conditions. “It is essential for consumers to carefully inspect all details such as interest rates, repayment schedules, associated costs, and other specifics outlined in the agreement,” says Kathuria.
Avoid Paying Upfront Fees: Avoid paying any kind of upfront fees even if asked to. “Remember to ask the lender for the fine print so you know exactly what are the charges and fees involved. Keep a tab on the customer care facility of the financial institution,” says Monga.
Do Not Fall For Offers That Are Too Good To Be True: A home loan is a long-term commitment and if you have a poor credit score, you will find it difficult to get a home loan at optimum interest rates. In that case, you should improve your credit score and then go for the loan. Do not opt for a loan if it comes too easily.
“For example, if the lender doesn’t bother much about your credit history, it is an immediate red flag. Steer clear from such transactions,” says Monga.
Similarly, if you are having difficulties in paying your home loan and somebody comes up with an offer that seems dubious, stay away.
Staying informed and aware of fraud within the home loan landscape is the best way to keep safe. Awareness is indeed a powerful tool.
