Mortgage Fraud Affects Real Estate Homeowners

Mortgage fraud is at least partly to blame for the mass of foreclosures that sit on the books of the nation’s biggest banks, many of which the taxpayers bailed out. As underqualified buyers applied for loans, brokers found ways to make the numbers “work,” so the underwriters would sign off on the loan. However, as rates adjusted and values fell, those underqualified buyers were the first to lose their homes, exposing inflated incomes and other falsified documents. While the foreclosures brought to light the ways in which mortgage fraud was being commited, it certainly did not stop it from occuring. In fact, the occurances of mortgage fraud have only increased in recent years.

Ki Gray explains more about mortgage fraud, and who is being targeted now that banks have tightened their lending guidlines:

“From 2007 to 2008, the FBI’s annual report showed that the industry experienced an increase of more than 83.4 percent in actual mortgage fraud dollars. Last year, mortgage fraud cost lenders in excess of $1.4 billion in liability, says the FBI report, and higher figures are expected for the 2009 fiscal year. Just through June of 2009, fraud figures exceeded the previous year during the same time period by around $208 million. Along with traditional methods, other major targets expected to be pursued by fraudsters are minorities and seniors struggling with foreclosure, along with federal economic stimulus programs. State-wide incidents in Florida reveal increased numbers of Hispanics being defrauded by Hispanics operating fraudulent companies under the pretense of financial and foreclosure assistance.”s

Perhaps what is most disheartening about the new cases of fraud is that homeowners who are looking for assitance and rescue are being taken advantage of. It will take the combined effort of both the FBI and the mortgage industry to combat this growing threat.

Click through to read Ki Gray’s full post.

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