Frederick County Short Sale Blog | Homes for Sale in Frederick Md

Emerging Mortgage Fraud Trends

Mortgage fraud continues to be one of the fastest growing crimes in the US.  It usually fits one of 3 categories:

• Fraud for housing or property
• Fraud for profit
• Fraud for criminal enterprise
  

1.  Borrowers commit fraud for housing, usually by providing false information to obtain a larger mortgage than they qualify for, or to obtain a loan they don't qualify for at all.  

example:  In Alaska a woman was sentenced to 37 months in prison for submitting a paystub to document her income, only later to be discovered that she had been fired from her employer for unlawfully transferring funds to her personal bank account.

 2.  Fraud for profit, or "industry insider fraud", is costly, and usually involve multiple people who each play a role in the fraud. 

example:  Thirty-one defendants were charged in a massive mortgage fraud scheme in southern Florida.  Mortgage loans were obtained for 27 properties throughout southern Florida.  The elaborate scheme involved sellers, buyers, appraisers and loan officers. The sellers overstated the true selling price of the properties, the buyers participated in a fraudulent purchase, and the loan officers submitted fraudulent mortgage loan applications, which included false employment verifications, pay stubs, income and funds and IRS Forms.  The appraisers attested to the inflated property values.

3.  Fraud for criminal enterprise,  is a growing trend involving criminals looking for less violent or dangerous crime.

example:  A St. Louis man attempted to launder the proceeds of his drug activity by using cash to invest in real estate.  He was sentenced to 6 years in prison and 3 years of supervised release.  This type of fraud most commonly involves property flipping 

Freddie Mac has a Fraud Hotline:  800-4 FRAUD 8 to report incidents of fraud.  There are several fraud resources on the website FreddieMac.com

The Highland Group