The Federal Bureau of Investigation (FBI) has declared mortgage fraud as a growing crime threat that is hurting homeowners, businesses and our national economy. The FBI has enacted ways to detect mortgage fraud by collecting and analyzing data. They’ll use this data to identify trends and patterns. Unfortunately, by the time they discover those trends or patterns, damage has already been done.
What exactly is mortgage fraud? Mortgage fraud is a misstatement, misrepresentation, or omission relied on by an underwriter or lender to fund, purchase or insure a loan. This type of fraud is usually defined as a loan origination fraud. Mortgage fraud also includes schemes targeting consumers, such as foreclosure rescue, short sale, loan modification, backwards applications, fraudulently inflated appraisals and illegal property flipping.
Mortgage fraud allows the criminal to earn very high profits for a very low risk of discovery. No wonder this type of fraud is and has been rampant. There’s a long list of perpetrators that include licensed/registered and non-licensed/registered mortgage brokers, lenders, appraisers, underwriters, accountants, real estate agents, land developers, investors, builders, bank account representatives and trust account representatives.
There have also been many instances in which organized crime has been involved in mortgage fraud in the mortgage-related industries that include construction, finance, appraisals, brokerage, sales, law and business.
These criminals have one thing in common; they have a high level access to financial documents, systems, mortgage origination software, notary seals and professional licenses.
The top schemes for mortgage fraud by percentage are: Loan Origination 62%, Title/Escrow/Settlement Fraud 14%, Real Estate Investment 7%, Short Sale 4%, Commercial Real Estate Loan Fraud 4%, Foreclosure Rescue 2%, Advance Fee 2%, Builder Bailout 2%, Equity Skimming 2% and Bankruptcy Fraud 1%. Currently, homeowners in negative equity positions are very vulnerable to short sale fraud schemes.
The total dollar losses through mortgage fraud can’t be calculated, but is said to be an approximate $1 to $2 trillion a year.
Yesterday, a federal court jury in Las Vegas found a former real estate agent from Arizona guilty of conspiracy and fraud in a mortgage-lending scheme that prosecutors said bilked lenders out of more than $24 million. Brett Depue, 42, of Gilbert Arizona was convicted and faces up to 240 years in prison and $8 million in fines. Ten co-conspirators were also convicted and involved a little more than 100 homes. This is just one, small instance of mortgage fraud, in one area of one state.
Gantenbein Law Firm can help with your mortgage, foreclosure or real estate legal issues. Our attorneys are located in Denver and serve clients throughout Colorado. Our Denver law firm also practices Tax Law, IRS Issues, Business Law, Real Estate Law, Wills, Trusts & Estate Planning, Credit Dispute and HOA Law. For more information and to discuss your best options, call our attorneys at 303-618-2122 or visit our website at www.gantenbeinlaw.com.