Housing Boom Stimulating Mortgage Application Fraud Boom

The national housing boom is producing a companion boom -- one that you don't read about as much: Dishonesty and outright fraud by home buyers and mortgage and realty industry professionals on loan applications has exploded in the past two yeas.

A newly-released national study by a research group says fraud-related cases on mortgage applications reported to the FBI more than doubled between 2003 and 2004.

What sort of games are people playing with mortgage applications? You name it -- everything from little white lies about income or assets all the way up to what the FBI calls "air loans" that are based on completely fabricated information.

The MARI report cites this real-life example to illustrate the problem: "An officer at a Florida mortgage company applied to a second lender for two stated income loans. The applications were submitted 90 days apart. In the first application, the borrower stated his monthly income as $24,000, and in the second he said it was $30,000." When the mortgage officer was challenged about the discrepancy, he replied, "I thought that on stated income loans you could claim an income as high as necessary" to qualify for the loan amount the applicant needed.

Post a Comment