Housing Fraud Up Again
Despite crack downs by law enforcement and more awareness in the market, housing fraud continues to be an attractive crime according to an article on Realty Times. In fact, the crime is up by almost a third in just the last year according to the Mortgage Bankers Association of America. The new study makes use of both FBI and private mortgage industry data, which provides a better overall picture of the true nature and volume of fraud in the housing market.
Mortgage fraud isn't just a phony mortgage. The data show that mortgage fraud runs the gamut from bogus property appraisals to borrower lies about employment and income. While many don't think about it, the "little white lie" to get your mortgage loan is fraud -- pure and simple.
As jurisdictions get smarter about mortgage fraud, the crime is moving from state to state. The most cases are now reported in Florida and California respectively, whereas Georgia had previously topped the national fraud rankings for most of the last decade. However, after state legislative and federal enforcement, the incidence of the crime has dropped.
It's no surprise that the most common type of fraud is still lying on the mortgage application. If a subprime loan was found to be fraudulent in the study, the vast majority had false information on the application. The most common problem continued to be lying about financial status of either the borrower or the borrower's assets, including financial assets, income, employment status, taxes and inflated appraisals for properties.
The study says to watch for more housing fraud, as the lending market tightens up and there is pressure on lending agents to generate sufficient "volume" of loans. So buyer beware as you get your mortgage quotes (so you know what your budget is) and go home shopping: don't get suckered into a fraud. Like your mom always said, tell the truth.