While the mortgage sector is one of the biggest financial activities in the world, mortgage fraud cases remain one of the top problems in this area of financing. One of the main reasons for the Great Recession in 2007 was the mortgage fraud that came into light as the list of mortgage defaults went out of proportion.
Some of the Fraud Cases
There are many types of mortgage fraud cases in the mortgage industry. One of the common frauds is the individual mortgage scam, where the applicant presents a fake identity or may represent counterfeit documents to the lender. The counterfeit documents can include fraudulent income statements or falsification of assets or any other materials that the lender requires. By presenting these forge documents, the applicant attempts to raise house finance and get a substantial mortgage.
While individual fraud has always been a big problem, today industry professionals may also resort to fraud to secure massive funding in the name of the mortgage. Industries may use fraud tactics like air loans or fake appraisals to cheat the system and qualify for a loan. These scams are more challenging to counter as these applicants come from the industry who carefully shape all the fake documents. Whether it is individual mortgage fraud or industry scam – both are crime and may lead to jail time.
Some of the other scams that are common in the mortgage industry include shady lending activities, foreclosure secure, and a scam where mortgage reduction takes place.
According to recent research, 1 in every 100 mortgage applications have an indication of fraud and can pass the qualification criteria by presenting fake documents.
Lenders are now getting more cautious when dealing with mortgage applications. These lenders now hire industry experts to investigate any mortgage application that seems a bit shady. Likewise, lenders have the right to reach out to any investigative or legal body such as the FBI if they suspect a mortgage fraud. There are tighter credit checks, more paper document requirements, and more authentication and verification. All these measures are there to minimize the risk of passing a mortgage to fraud as it ultimately brings losses to the lender and the whole economy. New and stricter laws are in place to deter people from attempting any mortgage fraud. One can read more about these in standard SOPs of mortgages that you can download from mortgage sites on the Internet.