Recent public sector financial distress due to a widespread mortgage loan defaults increasing pressure on federal prosecutors to investigate cases of fraud has increased mortgage created in the country. On 6 February 2004, told CNN that the FBI was warned that mortgage fraud spread so much that could trigger the ensuing "epidemic" of fraud, a massive financial crisis. Mortgage fraud has become so commonplace that thethe U.S. Department of Justice and the Federal Bureau of Investigation have been forced to create a completely new category for the prosecution of these cases. Assigned according to a CBS News report, the number of FBI agents in connection with crimes that are 50 percent from 2007 to 2008 increased mortgage. Prosecutors and investigators with both the state and local level also feverishly organizing task forces and the creation of Real estate fraud departments that this burgeoning wave of counter -Crime.
Crime & Punishment
The focus of these studies seem to borrowers, investors, mortgage brokers, surveyors and estate agents. Some of the charges against these offenders include making false statements on loan applications, bank fraud, mail fraud, wire fraud, conspiracy, as a means for washing and a range of applicable state laws. But the primary legal vehicle has been implemented by federal prosecutors in 1014, the sectionTitle 18, United States Code, the mortgage fraud as a federal agency includes crime who intentionally overestimated each country, property, or knowingly makes a false statement related to the purpose of influencing a financial institution on a loan application, purchase agreement or other document that explains. A violation of the Federal Mortgage Fraud Act (18 USC § 1014) alone is up to thirty years imprisonment and a fine under one million U.S. dollarsFine.
MORTGAGE fraud
The most effective way to avoid prosecution for mortgage fraud is mortgage fraud against a genuine participation is possible. Most of the crimes falling mortgage fraud can be classified into two categories: "fraud for housing" and "benefit fraud" is. Fraud for housing is often fraudulent acts committed by a borrower, who often received from his mortgage broker or real estate agents, trainers, a loan forthe ultimate goal for the purchase of a home. These fraudulent figures generally relate to the falsification of facts and documents to make during the loan application process for the borrower, the funding that he or she will not otherwise qualify to receive. Conversely fraud profits typically involves a more concerted plan, the entire real estate transaction process for the misuse of financial gain.
Fraud HOUSING
Income Fraud
This occurs when a borrowerfilled is his level of income to qualify for a loan or a larger loan amount. Despite the recent cuts in the use of cars, "stated income" or "no-doc liar loans," something has curbed fraud incomes, more and more borrowers generates more fraudulent Documents on the returns to falsify. Information technology and photocopying equipment is so advanced that very convincing documentation on how to profit and loss accounts, savings accounts and tax returns, be preparedDemand.
Employment Fraud
Overstated income in order to justify a loan application, the borrower be self-employed in a non-existing companies or to charge a higher position in a company than the borrower actually holds.
Failure to disclose liabilities
The debt-to-income ratio is an important part of the loan underwriting criteria for the eligibility of borrowers for mortgage loans to be determined. Consequently, borrowersconceal financial obligations, such as newly acquired credit card debt, mortgages and loans to private to artificially reduce their debt-to-income ratios.
Occupancy Fraud
Generally occurs when a borrower countries to fill a loan application that he or she intends to secure a property as their principal residence at a lower rate if the borrower actually intends to acquire the loan as an investment property to be preserved.
FraudPROFIT
Equity Skimming and cash-back schemes
A straw buyer is usually carried out, the buyer of the property because of its creditworthiness and obtain the resulting possibility of favorable financing. Unknowing Straw buyers may be manipulated by mortgage brokers and agents to the property is used later as a principal residence with the broker or agent as the purchase of the property manager to collect the expected rental income. According to the escrow account will be closed, and the mortgageEstate agents and collect their commissions, they proceed to collect and earn rental income not afford the mortgage payments.
Complex systems can include a buyer to know, straw, a surveyor who deliberately exaggerate the value of the property, a dishonest seller, filled with a dishonest intention to the sales price and Settlement Officer that undisclosed payments from the loan proceeds does. All these conspirators together, to parts of the collectionProceeds of an inappropriately large loan, before they finally let her go into arrears.
Appraisal fraud and price inflation
This form of fraud occurs when a dishonest verifier deliberately exaggerating the value of a property or changes in the assessment of an existing file will play at a higher value. If a house is overvalued, can make more money from the seller in a sales contract or the borrower will be procured through a cash refinance.
The new appraisal system for fraud: PriceDeflation
When you are done legitimately, a short sale occurs when a borrower is that more than his or her property value due to property sold below market value and the lender agrees to accept the lower repayment amount and forgive the difference. A new hybrid fraud has been found where an appraiser or a broker drastically devalued the property in an appraisal or broker price opinion (BPO), it is clear that the house sold easily at a price below market value. Of course, the newBuyer is in cooperation with the seller, brokers and consultants, so that all of the conspirators proceed to sell the house at a higher price for a large profit.
Identity Theft
Identity theft fraud occurs when a victim's identity is assumed by another, to a mortgage, without ever received the intention of all payments for the loan. The perpetrators often escape with a portion of the loan is and sometimes are brave enough to collect the rent of a property and someDeposits and rental income before it disappears.
The Buy and Bail
This totally new system is supported by a homeowner who can not sell, perpetrated at home because more owed on the property than its value. Because no creditor will be the owner of a loan for a second residence, the owner tells the lender that he or she intends to rent the current home, although he did not intend to do so. Sometimes a fake rental agreement will be used to further support the lie. Once the second house is purchased, the owner "bails" on the original home and not to make another mortgage payment.
AVOID & Preventing fraud
Mortgage fraud posed, often from groups who buy an abnormal number of similar transactions or full eject many listings at once. These outfits seem disorganized or unprofessional due to the large volume of transactions to try to manage them. There is also no coincidence that> Mortgage fraud has declined as housing values, since most fraud schemes include a financially distressed or vulnerable in other ways increases seller. It is also important to remember that the agent owed a fiduciary very strict duty to act in the best interest of their clients. So, before reporting a client to your local authorities, talk to your lawyer or real estate licensing department to ensure that you have proposed measures which do not constitute an infringement against yourfiduciary duty to your clients.
Brokers are in a unique position to identify them, and even prevent the occurrence of fraud, by asking the red flags right questions and to commissioners in their transactions a complete picture of what are the consequences associated with participation Mortgage fraud can give. While much of the damage has been done in the real estate market, we can prevent more of the same from occurring in the future.
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