Perhaps one of the most growing crimes in the country today is mortgage fraud. Additionally, foreclosure fraud and other subprime shenanigans are also just as popular. The real estate market took a nose dive in 2006, and continues to deteriorate over the years. There are now more mortgage delinquencies and this has led the financial crisis to become more prevalent all throughout the mortgage industry. In 2006, other things that became more profound included weak standards with underwriting as well as unsound management practices, and these things allowed perpetrators of mortgage fraud to exploit more and more lending institutes.
Schemes of this type of fraud often times employ certain misstatements as well as misrepresentation and even omission that relates to the potential buyer or property which relies on either an underwriter or a lender to insure, purchase, or even fund a loan. These can include things such as:
• Inflated appraisals
• False loan applications
• Fraudulent loan documents
• Stolen identities
• Straw buyers
There are now more and more various schemes out there nowadays, and mortgage fraud can also be classified as being bank robbery, where banks are not even aware of being robbed until months later, and possibly even years. Perpetrators will often target property owners that may already be in the process of battling to meet their payments each month on their mortgage. They also prowl on those who are looking to sell their homes fast in hopes of getting out of an obligation they can no longer afford.
Due to the increase in this type of fraud, many organizations and firms, such as the FBI, have begun to implement several various investigative routines that are designed to protect and combat mortgage fraud issues.
Mortgage Trends and Schemes
This is where property is purchased and receives a false appraisal for an amount that is higher than the actual value of the home, and then the person turns around and sells it for a higher value. The primary factor that makes this illegal is the fact that information on the appraisal is often times fake. This scheme involves one or more of these things:
• Falsified loan documents
• Kickbacks for buyers
• Inflated income of buyers
• Loan brokers
• Title company personnel
Loan Modification Programs
Scammers approach homeowners who are on the verge of losing their home and offer to help with what is known as a loan modification program. These programs are designed to help homeowners re-negotiate the terms that are present on their home in order to lower rates and mortgage payments each month. Large fees are asked for, and these perpetrators claim to negotiate on your part, but the downfall is they don’t. In turn, individuals end up losing their home and large sums of money.
Investors often will use straw buyers, false documents, and even a fake credit report. This is done in hopes of getting a mortgage in someone else’s name which is known as a straw buyer. During the closing, the straw buyer will sign their name and it gets signed over to the investor which then relinquishes the buyer’s rights and also does not offer a title guarantee. The investor will then rent this property out to other tenants until the home goes into foreclosure as there are no mortgage payments being made.
These are just a small few of the many mortgage fraud schemes that are being seen nowadays. Homeowners that are in the hole should talk strictly to the bank which their mortgage is through for help and resources to reputable companies that can offer a lending hand. There are certain programs that are indeed legit, and can help homeowners get out of the hole they are currently in. The best advice is to research and learn about what is legit and what ones are scams.