Criminal activities and ethical violations in different industries have already affected the economy in the past decades, especially in the financial, housing and banking sectors. This article is going to help people observe the complicated criminal and ethical issues that surrounds mortgage fraud. Fraud, in its simplest form, is deliberate deception and misrepresentation. While fraud in action is defined to be as, one who is deceptive by misrepresenting facts, information and figures.
Definition of Mortgage Fraud
Mortgage fraud is not only a predacious lending practice which target certain borrowers, but based in the Federal Bureau of Investigation, mortgage fraud is said to be a material misrepresentation, misstatement, or omission of that which is relates to a property or a potential mortgage, granted by a lender (or an underwriter) to fund, insure or purchase a loan. In this stated definition, mortgage fraud may be committed by both, the industry professionals, as well as, individual borrowers. If you feel that you have been a victim of mortgage fraud, in hindsight, go to this site to learn about the statute of limitations.
Reason in Committing Mortgage Fraud
There are a number of reasons professionals and borrowers are interested in committing mortgage fraud. The primary factors as to why people commit fraud, is for profit and for housing.
Fraud for housing may be committed by the borrowers who are usually assisted by loan officers or some lender personnel, to misrepresent or forget about related details concerning: income, employment, debts, credit, property value (as well as the property’s condition) – with the sole goal of maintaining or obtaining ownership in real estate.
It is very vital to note that housing fraud might be committed by an individual who intends to occupy an asset as their primary residence, or by an investor who intends to rent a property to re-sell for gain a source of income.
Fraud for profit might be committed by the professionals in the industry who misrepresent, misstate, or forget related details about personal or (clienteles’) income and employment, debts and credit info; or property’s value (and/or its condition) – with the goal to maximize profits in a loan transaction. It is also necessary to note, that fraud for profit might be committed by any professional in a loan transaction chain, which includes: the real estate agent, builder, mortgage broker or loan officer, credit counselor, property inspector, real estate appraiser, title company, insurance agent, escrow agent and attorney!
Professionals in such industries can also work in concert as a network, in order to defraud lenders, borrowers and underwriters – to share profits and maximize fees, in all of the mortgage related services. These actions are driven either by their aim to gain extra sales in commissions, or just to improve a position in investment. If you find yourself at the mercy of such a cabal, it may serve you better to seek legal council to address matters. Obviously, that status of your credit will be compromised, during such mishaps; so, you have the option to have a written explanation added to your credit report – giving a detailed explanation of your misrepresented debt; the structure of the letter should be similar to a goodwill letter. Go to http://deletebadcredit.org/shortcuts/the-easy-way for instruction on how this is written.
Usual Mortgage Fraud Scams and Schemes
The most usual financier mortgage fraud schemes are the various types of property flipping, straw buyer scam and the occupancy fraud. Property flipping is not at all illegal, if it is concomitant with buying a house, fixing or holding it and reselling it for the sake of a profit.
However, when a property is bought below the market value and directly sold at profit, with the assistance of a corrupt appraiser who confirms that the property value is really double the amount of the initial purchase – it is then when mortgage fraud has ben committed.
Occupancy fraud is a scheme that is used by investors in qualifying for a higher loan-to-value (ratio) mortgage, and purchases the property at a lower out-of-pocket cost, that further lowers the rate of the mortgage. Occupancy fraud happens when a borrower is claiming that a home will be owner-occupied, to obtain a bank status that is favorable, when the house will really remain vacant.
The straw buyer uses their income, identity and credit, to get the property for a new buyer who might not qualify. Straw buyers are used by some investors who are, unknowingly or willingly covering up other forms (and multiple layers) of fraud.
The most typical singular mortgage fraud scams are asset or income falsification and identity theft. Identity theft is where the real buyer of a property is falsely obtaining financing, using an identity that was stolen from another person – using information that includes social security numbers, addresses and birth dates; if you are a victim of these chain of events, and you find yourself being harassed by collection agencies, like ic systems, you can request a cease & desist order to stop the harassment.
The most typical professional mortgage fraud scams are the appraisal fraud and air loan. The air loan is an obtained loan in a nonexistent property or for a nonexistent borrower. A set of professionals will usually work together in creating a fake borrower; and while the air loan scam put cash in the hands of the culprits, no property will ever be sold or bought! Appraisal fraud usually involves a loan officer, an appraiser and a real estate agent, who work together in maximizing the amount of loans to increase their commission.
On the up-side, any individual can progress the market by reducing mortgage fraud. People must be realistic in their expectations in the borrowing and homeownership experience. Investors too, on the other hand, must set realistic goals for their profits.
Industry professionals should aspire to a higher standard of ethics, by providing incentives & rewarding responsibility.