The housing market crisis in the US has brought increased awareness of how people legally and illegally “game the system,” leveraging a house’s equity in ways that range from being ill-advised (getting loans you can’t pay) to illegal. While there are many other sites that discuss the current state of mortgage loans and using your house as collateral we’re going to look at from an identity theft prevention perspective. This builds on our previous article on mortgage fraud and identity theft.

For most Americans, the family home is their single most valuable asset, and their house’s value and credit status is practically shorthand for their entire credit rating. It’s no surprise that homes are common targets for identity theft. Fraudsters use your home to secure loans, leaving you on the hook. You have to pay or risk losing your house. Experienced ID thieves combine this basic form of fraud with other tactics. These include:

Appraisal Fraud

If the fraudster gets a hold of your home’s assessment, he may use image editing software like Adobe Photoshop to falsify the document, or use other methods to inflate the property’s apparent value by tens of thousands of dollars. This nets him more money and loads you with an even larger illegal debt than you would otherwise suffer. Furthermore, the falsified documents can cause taxation problems and the appearance that you, not the fraudster, are trying to cheat lenders.

Income Fraud

Since the identity thief is pretending to be you anyway, he feels no compunction about overstating your income to secure a better loan on your property. This variation is more common when the victim is well-known to the fraudster as a family member or work associate. This way, the identity thief can forge documents to misrepresent your income. He pretends to be you and takes out a huge loan that you couldn’t qualify for on your real income.

Loan Shotgunning

Why get one fraudulent loan when you can get three or more? This tactic is called “shotgunning” because it relies on quick simultaneous loan applications to institutions that have no knowledge of each other’s interests. The fraudster cashes out all the loans, leaving his victim on the hook for every single loan. Furthermore, since shotgunning is fraud even without the identity theft component, the victim may face criminal charges.

Combinations

A criminal can combine some or all of these options into a single fraud job, costing you far more than what you’d think was possible. Remember: Identity theft doesn’t just steal your good name. It misrepresents it. To make sure financial institutions know the “real you,” keep your mortgage paid, organize your finances and consider a credit protection service like TrustedID.