Mortgage fraud in Maryland
Sure, it wasn't hard to get a mortgage under false pretenses when the rules were so loose that anyone qualified. But shouldn't mortgage fraud be easing now that we're several years into a lending clamp-down?
Nope. Mortgage fraudsters will always find a way.
That's the lesson of the Federal Bureau of Investigation's newest Mortgage Fraud Report, which notes that the crime "continued to be an escalating problem in the United States during 2008." The FBI lists Maryland as one of the "top 10 mortgage fraud states" last year.
The problem ranges from people fudging numbers so they can buy a home -- the "crime? what crime?" folks -- to sophisticated thieves using faked documents to grab loan money and run.
The FBI warns that FHA loans, used to devastating effect in Baltimore flipping scams about 10 years ago, offer opportunities for today's crooks. And the housing slump is hardly a deterrent:
Multiple fraud schemes are being conducted by industry professionals who are in a position to exploit the current depressed housing market. Market conditions are also fueling the use of traditional and emerging schemes which have the potential to multiply across jurisdictions as foreclosures increase, the market contracts, access to credit diminishes, and more homeowners are unable to sell or refinance their homes. Properties affected by these schemes negatively impact neighborhoods; federally insured loan programs; the mortgage, banking, and securities industries; secondary market investors; tax payers; homeowners; and the overall US economy.
Posted by Jamie Smith Hopkins at 9:28 AM | Permalink
| Comments (4)
Categories: Mortgage fraud/scams
Categories: Mortgage fraud/scams
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Comments
FHA does not require mortgage lenders to follow the HVCC. Now all of the junk appraisals are going to be directed that way. Its only a matter of time that this will blow up. FHA used to be the most difficult to deal with but not anymore. They are doing streamline loans with no appraisals required, based on the previous values. These values are no longer valid during this depressed market. They are refinancing many marginal people for more than their homes are worth.
Posted by: MrEd | July 8, 2009 10:19 AM
Hi, MrEd -- I wondered about FHA and whether the appraisal experience would be markedly different than conventional now that the Home Valuation Code of Conduct is in place. Thanks for weighing in.
Posted by: Jamie Smith Hopkins | July 8, 2009 10:43 AM
The FBI is discovering more fraud because the lenders are being more strict with their files. They are putting every loan under a microscope. For full doc loans they are pulling the 4506T on every deal for their quality control. What you wrote seems to be referring to the "straw buyer". This form of fraud has been going on for years. It is about time the lenders start doing their homework before approving every deal that gets sent into underwritting. Much of the fraud that is being caught now is a result of what happened during the boom. They certainly will find more fraud cases if they are directing more efforts into mortgage fraud. Many homeowner's committ "occupancy loan fraud" on their application by claiming the home as their primary when in fact it is an investment. Many people think they can get away with it, but if they do default on the loan, there could be serious consequences. When the loan goes into foreclosure, the lender audits the file to see if there was any loan fraud. That is a result of foreclosures. Since MD has a higher than average foreclosure rate, there will be more fraud discovered since more files will be audited. I hope that makes sense... think about Florida and California. Had there not been so many foreclosures, there would have been a lot less fraud found on the files. Fraud and foreclosure are normally correlated. Even Michigan and Georgia are up there.
Posted by: Frank Rizzo | July 9, 2009 1:34 AM
The fraud is the current home prices - trillions of fraud when combined. Fraudsters include any and all drinking the bubble kool-aide - and trying to keep current/fraudulant prices intact. Reset to late 1990's prices necessary to financially punish the fraudsters en masse..
Posted by: Darwin Rules | July 9, 2009 3:00 PM