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Maggie Warner
MORTGAGE FRAUD
FBI and mortgage industry professionals believe that 10-15% of all home loan applications contain material misrepresentations. And, these fraudulent loans end up in foreclosure resulting in financial losses for lenders that ultimately drives up loan costs to the consumer.
From 2000-2004, the FBI reports more than 11,000 convictions resulting from investigations of financial fraud. Currently the FBI has enlisted the help of a notary public organization to assist fraud investigators in the prevention and identification of mortgage crimes. They are also investigating fake mortgage web sites that aid identity theft, and looking for schemes be |
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tween realtors, loan officers and appraisers to inflate the value of homes that would result in higher commissions.
Mortgage industry periodicals are full of articles describing multi-million dollar schemes that have defrauded lenders. Currently, lenders are devoting more time and money towards fraud detection and purchasing fraud detection tools, which range from Social Security Number Verifiers to Tax Return Verification. To counter appraisal fraud, there is greater use of Automated Value Models, which is totally dependent upon current data.
What does this mean for us? Higher loan fees, restrictive practices and legislation, poor publicity for our industry, are just the beginning. Fraud hurts everyone, the consumer, the realtor, the mortgage lender and the appraiser.
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