Mortgage forgery is a crime in which the intention is to mislead real or eliminate information about mortgage loan application to get a loan or to get a loan larger than that can have had the creditor or borrower know the truth.
In federal court of the United States, mortgage fraud is demanded as wire fraud, bank fraud, letter fraud, and money laundering, with up to thirty years in prison. Since the incidence of mortgage fraud has increased over the past few years, the states have also started imposing their own penalties for mortgage fraud.
Mortgage Fraud does not become confused with a predatory mortgage loan, which occurs when a consumer is misled or tricked by a lending agency. However, the practice of predatory borrowing often occurs simultaneously with mortgage fraud.
Video Mortgage fraud
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Residential fraud: This happens where the borrower wants to get a mortgage for obtaining investment property, but declares on the loan application that the borrower will occupy the property as a primary residence or as a second home. If not detected, the borrower usually earns a lower interest rate than is guaranteed. Because lenders typically charge higher interest rates for property that is not owned by the owner, which historically has a higher offense rate, the lender receives an inadequate return on capital and is too exposed to the relative losses to what is expected in the transaction. In addition, lenders allow larger loans in owner-occupied homes compared to loans for investment properties. When residential fraud occurs, the possibility of a tax on profit is not paid, resulting in additional fraud. This is considered a fraud because the borrower materially misrepresents the risk to the lender to obtain more favorable lending terms.
Income fraud: This happens when a borrower overestimates his earnings to qualify for a mortgage or for a larger loan amount. This is most often seen with so-called "income loans" mortgage loans (which are popularly referred to as "liar credit"), where the borrower, or loan officer who acts for the borrower with or without the knowledge of the borrower, declares no income verification required for eligible for a loan. Since the current mortgage lender does not have a "income income" lender, income fraud is seen in a traditional complete documentation loan in which the borrower forges or alters the Company's issued W-2 Form, tax returns and/or bank account notes to provide support for revenue increased. All lenders get official IRS transcripts that should be in accordance with the borrowers who provide tax returns. This is considered a fraud because in most cases the borrower will not qualify for the loan so the actual income has been disclosed. "The mortgage crisis" is caused, in part, when a large number of borrowers in areas with rapidly increasing home prices lie about their income, buy houses they can not afford, and then fail. Many past problems no longer exist.
Employment fraud: This happens when a borrower claims an entrepreneur in a non-existent company or claims a higher position (eg, manager) in a real company, to justify the fraudulent representation of the income borrower.
Failure to disclose obligations: Borrowers may hide liabilities, such as mortgage loans on other properties or newly acquired credit card debt, to reduce the amount of monthly debt announced on loan applications. This waiver of responsibility artificially lowers the debt-to-income ratio, which is the main underlying guarantee used to determine the eligibility for the majority of mortgage loans. This is considered a fraud as it allows the borrower to qualify for a loan that will not be given, or to qualify for a loan that is greater than it should have been provided if the borrower's true debts have been disclosed.
Fraud to Benefit: A complex scheme involving multiple parties, including mortgage lending professionals, in a financially motivated effort to deceive lenders large sums of money. Scams for profit schemes often include straw borrowers whose credit reports are used, dishonest appraisers who deliberately and significantly overestimate the value of the subject's property, dishonest settlement agents who may prepare two sets of statements completion of the HUD or make a disbursement of the undisclosed loan proceeds on the settlement statement, and the property owner, all in a coordinated effort to get an inadequate large loan. The parties involved share ill-gotten profits and mortgages eventually fail. In other cases, the naïve "investor" is lured into the scheme with the organizer's promise that the house will be repaired, repairs and/or renovations will be made, the tenant will be located, the rent will be collected, the mortgage payment is made and the profit will be split on the sale of the property, all without the active participation of straw buyers. Once the loan is closed, the organizer is lost, no repairs are made or the tenant is found, and the "investor" is responsible for paying the mortgage on the property that is not worth what to pay, leaving the "investors" financially destroyed. If undetected, the bank can lend hundreds of thousands of dollars against properties that are actually worth far less and in large schemes with many transactions, banks can lend millions more than valuable properties. The case of Robert Douglas Hartmann is a noteworthy example of this type of scheme. A detailed case study case of the United States v. V. Quintero-Lopez extends over 3 1/2 years (Bell, 2010).
Fraudulent ratings: Occurs when the value of a home assessed is deliberately exaggerated or minimized. When exaggerated, more money can be earned by the borrower in the form of refinance of cash, by the seller in the purchase transaction, or by the organizer of a non-profit mortgage scheme scheme. Fraud assessments also include cases where the value of the house is deliberately understated to get a lower price on a foreclosed home, or in a fraudulent attempt to encourage lenders to reduce the amount owed on the mortgage in loan modification. A dishonest appraiser may be involved in the preparation of a fraud judgment, or an existing and accurate assessment can be changed by someone with knowledge of graphical editing tools such as Adobe Photoshop. Independent Assessor is the current law.
Cash-back schemes: Occurs where the actual price of a property is illegally increased to give money back to the participants of the transaction, most often the borrowers, who receive an undisclosed "rebate" to the lender. As a result, lenders lend too much, and buyers pocket the excess or share with other participants, including sellers or real estate agents. This scheme requires fraud judgment to deceive the lender. "Fast-Relief" real-estate teachers "courses often rely heavily on this profitability mechanism.
Shotgunning: Occurs when multiple loans for the same house are acquired simultaneously with the total amount greatly exceeding the true value of the property. This scheme makes the lender exposed to huge losses because the next mortgage is the junior to the first mortgage to be recorded and the property value is not enough for the next creditor to collect against the property in foreclosure. The cases of Matthew Cox and Robert Douglas Hartmann are the most prominent examples of this type of scheme. The result of this scam is that lenders often demand that have first priority to the property.
Working Gaps: A technique that involves excessive buildup of lizers that is consciously executed on certain properties within a very narrow time frame, through serial recording of some Deeds of Trust or Assignments of Note. When recording legal documents in the United States, there is a time gap between when the Deed of Trust is presented to the Action & amp; when it actually appears in the data. Precision time engineering "work gap" between recording deed & amp; Subsequent appearances in the database recorder of action are important in spreading the perpetrator's fraud. The title search is done by the lender as soon as possible before each loan, promissory note, & amp; the recording of the deed will thus be mistakenly failed to show alternative libraries simultaneously in the queue. The purpose of the offender is the theft of funds from each lender by trickery, with all lenders simultaneously & amp; Falsely trusting their respective Deed of Trust to become senior in position, when in fact there is only one. White-collar criminals who use this technique will often claim innocence based on administrative errors, poor records, or other cigarette smoke reasons in an attempt to obscure coordination & amp; intent inherent in this mortgage fraud version. This "game" or exploitation of structural weakness in the US legal system is an important precursor for "shotgunning" and is considered a white-collar crime when implemented in a systemic fashion.
Identity theft: Occurs when someone takes someone else's identity and uses that identity to get a mortgage without the knowledge or consent of the victim. In this scheme, the thief disappears without paying the mortgage. Such a scheme is usually not found until the lender tries to collect from the victim, which may incur substantial costs to try to prove his identity theft.
Counterfeit loan application without the knowledge of the borrower: The loan application is falsified without the knowledge of the borrower when the actual borrower will not be eligible for the loan for various reasons. for example the parties involved will make the commission out of the transaction. Business only happens if loan application is falsified. For example, the borrower applies to a loan that states a monthly income of $ 2,000 (but with a $ 2,000 per month income the borrower will not qualify), but the broker or loan officer falsified income documents and loan applications that the borrower earns a monthly income of $ 15,000. The loan gets approval from the broker/loan officer etc. Got their commission. But borrowers are struggling to repay loans and default on loans in the end.
Maps Mortgage fraud
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Mortgage scams can be performed by one or more participants in a loan transaction, including the borrower; a loan officer from a mortgage; real estate agent, appraiser, representative or representative or buyer representative; or by many parties as in the example of the fraud ring described above. Unreliable and irrevocable stakeholders can encourage and assist borrowers in fraud as most participants are usually compensated only when the transaction closes.
During 2003, the BBC Money Program in the UK revealed systemic mortgage fraud throughout HBOS. The Money program finds that as long as the investigative broker advises undercover researchers to lie on applications for their own certified mortgages, among others, Royal Bank of Scotland, The Mortgage Business and Birmingham Midshires Building Society.
In 2004, the FBI warned that mortgage fraud became so rampant that the resulting "epidemic" crime could trigger a massive financial crisis. According to a December 2005 press release from the FBI, "mortgage fraud is one of the fastest-growing white-collar crimes in the United States".
The number of FBI agents assigned to mortgage-related crimes increased 50 percent between 2007 and 2008. In June 2008, the FBI claimed that the burden of mortgage fraud cases has doubled in the last three years to more than 1,400 pending cases. Between March 1 and June 18, 2008, 406 people were arrested for mortgage fraud in the FBI stinging across the country. Those arrested include buyers, sellers and others in the vast mortgage industry.
Fraud Enforcement and Recovery Act of 2009
In May 2009, the Fraud Enforcement and Recovery Act of 2009, or FERA , Pub.L. 111-21, 123Ã, Stat.Ã, 1617, S. 386, public law in the United States, enacted. This law takes a number of steps to improve federal fraud enforcement, particularly regarding financial institutions, mortgage fraud, and securities fraud or commodity fraud.
Important to note, Part 3 of the Act authorizes additional funds to detect and prosecute fraud at various federal agencies, in particular:
- $ 165,000,000 to the Department of Justice,
- $ 30,000,000 each to the Postal Inspection Service and Inspector General's Office in the US Department of Housing and Urban Development (HUD/OIG)
- $ 20,000,000 to the Secret Service
- $ 21,000,000 to the Securities and Exchange Commission
This authorization was made for the federal fiscal year beginning October 1, 2009 and 2010, after which it ended, and is in addition to the previous official budget for these institutions.
See also
- FBI
- Phillip E. Hill, Sr.
- The housing market crisis in the UK (2008)
- MERS
- the housing bubble of the United States
- Taylor, Bean & amp; Whitaker, the top-10 US wholesale mortgage lending company that quits doing business after fraud revelations
http://www.cnn.com/2004/LAW/09/17/mortgage.fraud/
Further reading
- Koller, Cynthia A. (2012). "White Collar Crime in Housing: Mortgage Fraud in the United States." El Paso, TX: LFB Scholarly. ISBN 978-1593325343
- Patterson, Laura A. & amp; Koller, Cynthia A. Koller (2011). "Fraud Diffusion Through Subprime Lending: The Perfect Storm." In Mathieu Deflem (ed.) Economic Crisis and Crime (Sociology of Criminal Law and Deviance, Volume 16), Emerald Group Publishing Limited, pp.Ã, 25-45.
Note
External links
- REPORTING MORTGAGE FRAUD TO THE HUD Inspector General's Office
- "Mortgage scams: New and better lenders have tightened standards, but fraudsters have found a new way to beat the system.", CNN Money . October 17, 2008.
- "Stimulus leads to consumer fraud". Philadelphia Inquirer . March 7, 2009.
- Semi-Annual Report to Congress and other mortgage fraud information from the Office of the Inspector General, Department of Housing and Urban Development USA
Source of the article : Wikipedia
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