Mortgage Rate News

One of the reasons that we have such a severe mortgage market crisis is the high incidence of mortgage fraud. While it is true that some homeowners made very poor decisions (and should have known better), there are also plenty of other homeowners who were hoodwinked and swindled and didn’t have access to reliable and accurate information. It is time for financial literacy to become an important part of education in this country. Too many citizens are overwhelmed by slick presentations and monetary calculations and decisions. Too many people are left at the mercy of those who know how to game the system.

CNN Money reports on some of disturbing mortgage fraud schemes seen over the past few years:

Mortgage schemes come in many flavors, but the most common by far are conducted by industry insiders. Some 80% of all fraud losses involve collaboration or collusion by professionals, which is known as “fraud for profit,” according to the FBI.

Often the schemes involve inflated appraisals, falsified documents and fake buyers. The crooks take as much equity as they can out of a house before they stop making mortgage payments, usually leaving the lender stuck with the property.

In order to bring the perpetrators to justice — and to send warnings to those considering such a path in the future — the FBI’s Mortgage Task Force is working hard on the local, state and federal level to find those who are responsible for defrauding their fellow citizens.

This is encouraging right now, but what happens when things calm down a bit? Will the FBI remain vigilant? Also, are there better regulations in place to prevent such things from happening again? Some of the laws, rules and regulations passed in recent requiring stricter lending standards and greater accountability. The mortgage industry has proved that it can’t police itself; it obviously needs someone else to do the policing.

Tags: mortgage fraud, FBI mortgage fraud, home mortgage loan, mortgage loan blog,
financial literacy, mortgage market crisis