FBI involved in preventing mortgage loan fraud
A press release issued by MortgageDaily.com says that the Federal Bureau of Investigation is going to release a report soon that will show mortgage fraud losses totaled $1 billion in 2005. Click here to read the release.
The FBI says that “The increased reliance by both financial institutions and non-financial institution lenders on third-party brokers has created opportunities for organized fraud groups, particularly where mortgage industry professionals are involved.”
The problem this situation is presenting for honest real estate investors is multi-fold.
First, you may find people increasingly suspicious of you, even though you are operating ethically and with integrity. Second, states are passing laws that could make it more difficult for you to help distressed buyers and sellers. And third, if you’re not very careful, you could become a victim yourself—or perhaps even an unknowing participant.
The FBI says the following are indicators of mortgage fraud:
Inflated Appraisals
• Exclusive use of one appraiser
Increased Commissions/Bonuses - Brokers and Appraisers
• Bonuses paid (outside or at settlement) for fee-based services
• Higher than customary fees
Falsifications on Loan Applications
• Buyers told/explained how to falsify the mortgage application
• Requested to sign blank application
Fake Supporting Loan Documentation
• Requested to sign blank employee or bank forms
• Requested to sign other types of blank forms
Purchase Loans Disguised as Refinance
• Purchase loans that are disguised as refinances requires less documentation/lender scrutiny
Investors-Short Term Investments with Guaranteed Re-Purchase
• Investors used to flip property prices for fixed percentage
• Multiple "Holding Companies" utilized to increase property values
Don’t let anyone talk you into participating in a deal that is not totally legal and ethical. If you’re not sure of the legality of a particular lending strategy, contact an attorney before you take any action. And pay careful attention to new legislation in your state so that you don’t make an innocent mistake that could violate a law.
Jackie
Chief Blogger
Wealth Intelligence Academy
