FBI warns of escalating mortgage fraud

[moh malekpour]

http://www.usatoday.com/money/economy/housing/2008-05-13-mortgage-fraud_N.htm?loc=interstitialskip

Common types of mortgage fraud are misrepresentation of income or assets, forged documents, misrepresentation of a borrowers' intent to occupy a property and inflated appraisals.

The depressed housing market provides an "ideal climate" for perpetrators of fraud, the FBI report said, adding that identify theft, particularly targeting borrowers with good credit, is likely to increase. It also warned of other scams, promoted as foreclosure rescues.

Earlier this year, the industry-funded Mortgage Asset Research Institute said Florida led the led the nation in mortgage fraud in 2007 for the second straight year, followed by Nevada, Michigan, California, Utah and Georgia.

The FBI is investigating more than 1,300 mortgage-fraud cases and conducting 19 corporate investigations linked to the subprime lending crisis. Federal authorities have formed a task force, headed by prosecutors in New York, to determine if lenders or Wall Street firms participated in fraud

 

[panappr]

1,300 cases? What will happen to the hundreds of thousands of cases in LA alone? Lets face it, there aren't enough prisons, unless we lock-up the entire United States and call it one big prison.

 

[The Warrior Monk]

I expect fraud to increase...many MBs are at the end of their ropes financially, facing loss of business, and, in some cases, personal bankruptcy. A few have called the office...they're all in panic mode to get things done. It wouldn't surprise me that rules would get bent for their own personal "survival."

I'm simply done with MBs...I won't deal with them.

 

[Joyce Potts]

I hoping June 2008 will be the month for multiple criminal indictments for many.

 

[TJSum]

The sad truth is many of the current foreclosures involved no fraud at all, the "bogus" loan products were perfectly legal. Who ever decided to make it standard lending practice to qualify borrowers on the first year of a teaser adjustable rate mortgage? No income proof, no asset proof, no problem. No money down, interest only, option arms, no problem. They keep looking for scapegoats to blame everything on, where there was actually fraud involved, but the entire system was broken, the entire system and all parties involved deserve some blame.

Just a general question, how can the fraud increase in this climate with the UW's actually going through everything with a fine tooth comb now? It seems to me fraud is much easier to conceal when times are good.

 

[panappr]

The sad truth is many of the current foreclosures involved no fraud at all, the "bogus" loan products were perfectly legal. Who ever decided to make it standard lending practice to qualify borrowers on the first year of a teaser adjustable rate mortgage? No income proof, no asset proof, no problem. No money down, interest only, option arms, no problem. They keep looking for scapegoats to blame everything on, where there was actually fraud involved, but the entire system was broken, the entire system and all parties involved deserve some blame.

I think fraud is when you sign a piece of paper stating that you make $200,000 per year, when the reality is you only make $50,000.

 

[Jon Green]

Example of MB pressure

I received an FHA order on a property I had previously appraised. I was recommended by the homeowner to their new mortgage company. This mortgage company called me for a comp check. I informed them that I do not do comp checks. I informed him that it was a violation of USPAP to appraise a property based on a predertimined value. He informed me that he had been in the business for 17 years and never heard of appraisers not doing comp checks. He said if I won't do it that he would find someone else to do it and that he already had someone available for tomorrow. He told me that he needed a $250K and that he will look for someone who would appraise the property for that amount. He told me that he doesn't have any issues locating appraisers that work with him on values. I told him that was very discouraging and that I am not willing to do this. Well needless to say he canceled the order. Assuming what he is saying is true, how sad is it that he has a 17 year history of appraisers hitting his value.


P.S. The company is called Topdot Mortgage and the rep is a Wayne Knowles.

 

[TJSum]

I'm not denying fraud is involved in some loans, just wish to show that the system was so broke, fraud wasn't even necessary. Instead of looking for scapegoats to avoid fixing the entire system, the only real fix is to in fact fix the entire system.

I wish I had a penny for each time a loan officer or real estate agent told me what I told them was "a first", "never heard that before". And no, I do not believe them...

 

[Marcia Langley]

I agree. The bad market has put enormous pressure on people to simply survive. The bad behavior on all sides is getting worse.

 

[JonGalt]

I received an FHA order on a property I had previously appraised. I was recommended by the homeowner to their new mortgage company. This mortgage company called me for a comp check. I informed them that I do not do comp checks. I informed him that it was a violation of USPAP to appraise a property based on a predertimined value. He informed me that he had been in the business for 17 years and never heard of appraisers not doing comp checks. He said if I won't do it that he would find someone else to do it and that he already had someone available for tomorrow. He told me that he needed a $250K and that he will look for someone who would appraise the property for that amount. He told me that he doesn't have any issues locating appraisers that work with him on values. I told him that was very discouraging and that I am not willing to do this. Well needless to say he canceled the order. Assuming what he is saying is true, how sad is it that he has a 17 year history of appraisers hitting his value.


P.S. The company is called Topdot Mortgage and the rep is a Wayne Knowles.

I face this everytime I go out to look for business. I too have had homeowners request that a LO use me for the appraisal and experienced a similar result. I wonder what they are telling the borrower as to why they won't use the appraiser they wanted?

P.S. Topdot is a real piece of work.