Mortgage Fraud: Education Key to Prevention
Recent fraud cases show that federal and state law enforcement are cracking down on these mortgage fraudsters, and are stepping up the number of investigations, nearly doubling their caseloads in the last year, according to the latest FBI task force report on Mortgage Fraud. Two cases announced in early April, one in Colorado and the other in New York City illustrate clearly what's at stake -- people's homes and millions in cash.
The scenario is a familiar one: Desperate homeowners who are falling behind on mortgage payments want to find help. They find a scammer instead. The scammer tells them not to worry, sign over the house and make payments to them if possible. The homeowners think they've found a hero to champion their cause. Instead of keeping the promise, the scammer steals the title to the house, gets a shyster appraiser to inflate the value of the home, and then turns around and sells it to unsuspecting buyers.
The scenario is a familiar one: Desperate homeowners who are falling behind on mortgage payments want to find help. They find a scammer instead.
The number of these types of mortgage fraud continues to rise, along with the number of foreclosures. In 2009, foreclosure filings were reported on more than 2.9 million properties -- a 21 percent increase in totals from 2008, and a 120 percent increase over 2007's numbers.
One resource institutions can point their customers and consumers to is the new booklet Be Your Own Best Advocate: Mortgage Fraud Prevention by BITS, the technology division of the Financial Services Roundtable. The booklet educates consumers about mortgage fraud and gives simple solutions they can use to protect themselves. As Leigh Williams, President of BITS notes in a recent interview, "Preventing fraud in products such as mortgage lending is an issue for many institutions. Anything that hurts a homeowner is bad for the homeowner and the institutions."
Examples of common mortgage fraud schemes are outlined in the booklet, such as signing incomplete documents or making payments for foreclosure rescue services that are otherwise free through government programs, such as the Homeownership Preservation Foundation and their HOPE Hotline.
Common mortgage fraud scams include property flipping, real estate investment schemes and reverse mortgage scams. The booklet also includes examples of foreclosure rescue scams that prey upon individuals who are in danger of losing their homes, and recommends that consumers contact their lender or non-profit organizations, which can assist the consumer before they fall victim to this fraud.