Mortgage Fraud Affects Everyone, By Darren Malek
The last few years have provided some hard-won financial education for millions of Americans, and most of us now realize the part overvalued mortgage-backed securities played in the 2008 subprime mortgage crisis that led to the worldwide banking crisis and economic meltdown. But, unfortunately, there is never a shortage of individuals and groups who use unscrupulous methods for financial gain.
The Federal Bureau of Investigation defines mortgage fraud as the making of misrepresentations, misstatements, or omissions of material facts relating to a mortgage contract. Both buyers and sellers, and even groups of financial professionals, can commit mortgage fraud at various levels. A borrower may commit fraud by failing to provide correct information about income, debts, and creditworthiness. Occasionally, loan officers perpetrate fraud by falsifying information about a client’s employment or about a property’s value. And we often see news reports of groups of people who come together to create elaborate schemes involving “straw buyers” who act as fronts for investors seeking to win the advantages provided to owner-occupied properties. Anyone along the chain of financial professionals who work with loans, such as home inspectors, insurance providers, and title and escrow agents, can be a party to a fraudulent transaction.
Many states have strict auditing regulations for lenders. Consumers have recently become more realistic in their expectations of the size of the loans they can afford. Investors and financial leaders must set appropriate profit goals and heed higher ethical standards, while government should work to craft uniform and fair legislation.
About the author:
Darren Malek is a managing member in Veritas Law Firm. He concentrates on providing strategic solutions in matters of financial and real estate law.