On the front lines against mortgage fraud. Dearborn Mortgage Fraud

On the front lines against mortgage fraud

Mortgage fraud has made headlines locally and nationally. Most of the time, mortgage fraud involves identity theft or fraud — making a borrower appear to be somebody else, with a better job, more income or fewer debts. Somebody more creditworthy.

But some mortgage fraud involves a broker or loan officer telling the mortgagee — the lender — and the borrower that the house is worth more than it is. This way, they can close a larger loan and make a bigger commission. Since real estate agents also usually make a percentage of the sale as commission, sometimes they can be involved. In reality, most loan officers, mortgage brokers and real estate salespeople are ethical and would never think of engaging in mortgage fraud. But mortgage fraud of this type always originates with one of the parties who makes a commission on a closed sale.

Sometimes, fraud like this can be accomplished without an appraiser involved. Honest, professional appraisal reports are simply altered, or honest, professional appraisers' signatures forged. But in reality, a complicitous appraiser often makes it easier to perpetrate mortgage fraud. At the same time, appraisers are also homeowners', lenders' and the economy's best defense against mortgage fraud.

Appraisers are paid a set fee for their work whether a deal is closed or not. Appraisers are hired by and work for the lender that is considering loaning the money to buy a house. That lender is interested in an objective, third party, professional opinion of the true value of the home. The lender needs to know that if the borrower defaults, the collateral used to secure the loan — the house — is valuable enough to cover their loss.

Appraisers do not work for individual, commissioned loan officers, mortgage brokers or real estate agents. If they did, there would be too much pressure to "make the deal work," rather than arrive at a professional, considered opinion of the market value of the property. Appraisers also do not work for borrowers, at least in the context of a mortgage loan. But borrowers work closely with mortgage brokers, loan officers and real estate agents, and benefit the most from a third party, objective valuation of the home they want to buy.

If something catastrophic happens, such as a job loss, illness, divorce or death, and a borrower can no longer make payments on the home they've mortgaged, they will need to be able to sell the home for enough money to cover the balance of their mortgage. So, nobody benefits more from an appraiser's professional opinion of value on a home than the new homeowner, even though there is no direct client relationship.

Like some mortgage brokers, loan officers and real estate salespeople, some appraisers are "bad apples" and will agree to go along with a scheme to defraud lenders and homebuyers so bigger commissions can be had. Not us, and not the vast majority of appraisers. Again, the appraiser is paid a set fee whether the loan closes or not, and does not work for any of the commissioned parties to the transaction. Appraisers are therefore a homeowner's, and a lender's, best front line defense against mortgage fraud.

Link

http://mortgagefraudblog.com/

Mortgage Fraud Tips (Taken directly from the FBI website)

TIPS TO PREVENT YOU FROM BECOMING A VICTIM OF MORTGAGE FRAUD

Some general tips :

If it sounds too good to be true—it probably is!
Never sign a blank document or a document containing blanks. This leaves you vulnerable to fraud.
Don’t sign anything you don’t understand.

Mortgage Fraud

Get referrals for real estate and mortgage professionals. Check the licenses of the industry professionals with state, county, or city regulatory agencies.
Be suspicious of outrageous promises of extraordinary profit in a short period of time.
Be wary of strangers and unsolicited contacts, as well as high-pressure sales techniques.
Look at written information to include recent comparable sales in the area and other documents such as tax assessments to verify the value of the property.
Understand what you are signing and agreeing to. If you do not understand, re-read the documents or seek assistance from an attorney.
Make sure the name on your application matches the name on your identification.
Review the title history to determine if the property has been sold multiple times within a short period. It could mean that this property has been "flipped" and the value falsely inflated.
Know and understand the terms of your mortgage. Check your information against the information in the loan documents to ensure they are accurate and complete.
Check out the tips on the Mortgage Bankers Association's (MBA) website for additional advice on avoiding mortgage fraud.

Mortgage Debt Elimination Schemes

Be aware of e-mails or web-based advertisement that promote the elimination of mortgage loans and credit card and other debts while requesting an up-front fee to prepare documents to satisfy the debt. The documents are typically entitled Declaration of Voidance, Bond for Discharge of Debt, Bill of Exchange, Due Bill, Redemption Certificate, or other similar variations. These documents do not achieve what they claim.
Remember, there is no magic cure-all to relieve you of debts you have incurred.
Borrowers may end up paying thousands of dollars in fees without the elimination or reduction of any debt.

Forclosure Fraud Schemes

Perpetrators mislead the homeowners into believing that they can save their homes in exchange for a transfer of the deed, usually in the form of a Quit-Claim Deed, and up-front fees. The perpetrator profits from these schemes by re-mortgaging the property or pocketing fees paid by the homeowner without preventing the foreclosure. The victim suffers the loss of the property as well as the up front fees.
Be aware of offers to "save" homeowners who are at risk of defaulting on loans or whose houses are already in foreclosure.
Seek a qualified Credit Counselor or an attorney to assist you.

Predatory Lending Schemes

Before purchasing a home, research information about the prices of homes in the neighborhood.
Shop for a lender and compare costs. Beware of lenders who tell you that they are your only chance of getting a loan or owning your own home.
Beware of "No Money Down" loans. This is a gimmick used to entice consumers to purchase property that they likely cannot afford or are not qualified to purchase. Beware of the mortgage professional who falsely alters information to qualify the consumer for the loan.
Do not let anyone convince you to borrow more money than you can afford to repay.
Do not let anyone persuade you into making a false statement such as overstating your income, the source of your down payment, or the nature and length or your employment.
Read and carefully review all loan documents signed at closing or prior to closing for accuracy, completeness and omissions.
Be aware of cost or loan terms at closing that are not what you have agreed to.
Be suspicious if the cost of a home improvement goes up if you accept the contractor's financing.