But Scam Artists Have Found New Ways To Beat The System
By: Les Christie
Source: CNNMoney.com
The group counts as fraud any misrepresentation intended to get a better deal on a mortgage or a home sale. During the boom, that might have meant a buyer who inflated his income to qualify for a bigger loan. Some went so far as to get a fake appraisal, invent a fake buyer, and after securing a mortgage, absconding with the cash.
Such ruses may not work in this environment, with lenders tightening up their standards. But several scams still are effective, according to Jim Ronan of Interthinx, a provider to lenders of fraud-prevention services, and Robert Hagberg, a fraud investigator for mortgage giant, Freddie Mac. “It’s a constant battle to keep up with the innovative ways that scam artists come up with to defraud others,” said Vincent Robago, an Arizona assistant attorney general who works on mortgage fraud cases, “especially in the real estate industry where transactions are very complicated.”
The New Appraisal Fraud
The New ‘Liar Loan’
“Liar loans are now fully documented – but with really good fraudulent documents,” said Hagberg. In one case investigated by Interthinx, a New York man buying an investment property in Georgia provided documents that showed double his actual salary. Advanced information technology and photocopying equipment have gotten so accurate that very convincing papers, including income statements, savings accounts and tax returns can be produced on demand. Ronan said there are Web sites that provide believable documents that scam artists use. “Because they say it’s for ‘novelty purposes,’ you can’t really do anything about it,” he said. “They don’t say it can be used to defraud.” Scams that misrepresent income or employment are still the most common type of fraud, according to MARI.
‘Buy and Bail’
The Federal Home Administration announced in late September that it hoped to head off many buy-and-bails by no longer insuring mortgages if the homeowners had existing loans – unless they could show enough income to pay off both loans simultaneously. But don’t sell fraudsters short – they’ll probably find brand new ways to get around the policy.
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Estate Specialists Representing Both Buyers And Sellers
All information is derived from the Palm Beach County Property Appraisers website and the MLS.