Mortgage Fraud Trends Part 3

Mortgage Fraud Trends

In Part Two of the series, I presented four types of Fraud for Profit Schemes. In Part Three, I will present the final four types.

Inflated Appraisals – An appraiser purposely completes an appraisal based upon false or misleading date in order to over- or under-state the value of the property. This scheme usually involves the buyer, loan officer, or real estate agent and their knowledge of the misrepresentation.

Foreclosure Schemes – A person offers to assist an underwater or preforeclosure homeowner. The scheme almost always involves transferring the deed to the property. The homeowner is usually asked to pay substantial upfront fees for the service.  The person pockets the up-front fees and then quickly sells the property. The homeowner is left without recourse since they no longer own the home.

Equity Skimming – This scheme almost always involves an investor. The investor uses a straw buyer to purchase the property. Shortly after closing the straw buyer signs a deed transferring ownership to the investor. The investor makes no mortgage payments but rents out the property collecting the rent until the property is foreclosed upon.

Air Loans – The scheme has no real property and no real buyer. Both are imaginary and devised, almost always by a mortgage broker. The broker originated the loan on behalf of the lender with the intent to generate profit from the fraudulent mortgage. After closing, no payments are made on the loan and the lender is left with nothing to foreclose on.

While much has changed in the past few years, many of these schemes are alive and well. We recently had a client who lost their home to foreclosure. They were approached by a Loan Modification Company who offered to file a lawsuit to stop the foreclosure. As part of the deal, the homeowner was to pay them $2500 and sign over the deed to the property. Thank goodness they called me prior to going ahead with the deal!

Tom Branch, Broker, CDPE, SFR

About Tom Branch

Tom Branch has written 597 posts in this blog.

Have you ever just met someone, but felt you like you'd known him for years? That's what most people experience with Tom. He has a knack for making folks feel right at home. After 21 years in the Air Force, loyalty and honesty are the foundation of everything Tom does. In addition to being a Texas Real Estate Broker, Tom is a Certified Distressed Property Expert (CDPE) and a Short Sales & Foreclosure Resource (SFR).