MORTGAGE FRAUD ON THE RISE

Mortgage fraud is a growing crime threat that is hurting homeowners, businesses and the national economy. From foreclosure fraud to subprime shenanigans you can’t read a newspaper or watch TV without encountering this type of news. And although the FBI has a program in place to help the victims it is important to keep ourselves educated, about how the market is responding and how to prevent it.

Mortgage fraud is misrepresenting or omitting information on a mortgage application to obtain a loan or a larger amount than would have been obtained had the lender known the truth. It is prosecuted with penalties of up to thirty years imprisonment. Despite this, incidences have risen over the past few years. Mortgage fraud may be perpetrated by one or more participants during a loan transaction, the borrower, loan originator, real estate agent, appraiser, attorney and title or escrow representative.

Mortgage fraud includes misinformation regarding income, occupancy, employment as well as failure to disclose liabilities, appraisal fraud and identity theft among others. According to CoreLogic’s 2013 Mortgage Fraud Report, the income application fraud risk rose 13.3 percent nationally from the second quarter of 2012 to the second quarter of 2013. Undisclosed fraud which is a failure to disclose debts during the loan application process increased 2.1% compared to the same quarter in 2012.  "As the housing market and economy have healed over the last 18 months, a transition away from property-related to identify-related application fraud has occurred. Rising prices and a healing housing market make property-related mortgage application fraud less likely, but a higher level of scrutiny on an applicant’s ability to pay increases the propensity to attempt income-related fraud." Dr. Mark Fleming, Chief economist, CoreLogic

The FBI has recommendations in place for protection against mortgage fraud, after all, it is our own individual responsibility to protect ourselves. So here are some tips on how to stay safe and avoid mortgage fraud.

-Get referrals for real estate and mortgage professionals when thinking about buying or selling a home. Hold the professionals accountable for their behavior.

-Beware of gimmicks used to entice a person to buy a property they can’t afford, walk into the deal knowing how much you can afford, have a budget.

-Don’t let anyone talk you into making a false statement on a loan application. No matter how small or insignificant, overstating or lying on a mortgage application constitutes fraud!

-Never, ever sign a blank document or a document containing blank lines. If you don’t understand what you are signing, get an attorney!

-Most importantly, asking questions and staying informed are the best tools we have against any kind of fraudulent and illegal activity.