Banks are re-examining loans that took place during the housing boom and are now finding problems which has resulted in a large jump of reported mortgage-fraud. Reports are showing an 88 percent jump in the second quarter according to the Treasury Department.
“Most of the mortgages suspected of fraud closed during the height of the real-estate bubble, the financial-crimes division said. The report added that 81 percent of the complaints involved suspicious activities before 2008, and 63 percent described what appeared to be fraud occurring four or more years ago – Source.”
The agency reports that 29,558 suspicious activity reports have been filed that may involve possible loan fraud. The same time last year 15,727 reports were filed.
“The Financial Crimes Enforcement Network said California had more reports of suspected mortgage fraud on a per-capita basis than any other state, followed by Florida and Nevada – Source.”
The Treasury thinks this recent spike in fraud reports may be in part to loan-repurchase demands from investors and what financial institutions are finding as they go through defaulted mortgages.
Financial Crimes Enforcement Network Director, James Freis Jr., believes that mortgage fraud still continues now but at a much lower level – Source.
What are your thoughts on this matter? Do you think mortgage fraud is on the rise or decline?
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1 thought on “Treasury Reports An 88 Percent Increase In Mortgage-Fraud Since 2010”
Granted, a great deal of people purchased homes they really couldn’t afford during the housing bubble.
who knows what the circumstances were for each individual. If a prospect was looking to spend a maximum of say $200,000 for a home and none were available at that price, the prospect was guided towards a much more expensive home by the broker, say a $400,00 home, or $200,000 more than he or she could afford on their income. But the trick was to appy for, say an interest only or a variable loan that would baloon, say 5years hence. at whcih time most homeowners realized that they were not able to afford to pay the new increased mortgage, but the mission was accomplished, brokers made more commisions, banks closed on a great deal more loans, etc. and we are all seeing the result of that fiasco. The one sure thing is that before the loans were approved each lender was supposed to have done a full financial research on each applicaion as part of their underwritting process, but it seems that there were a lot of short cuts taken during the underwritting process. Know the banks and lending institutions are looking to claim mortgage loan fraud committed by the mortgage loan applicants, and honestly speaking, the banks are the one’s that shoulld be held responsible for the present Real Estate situation which was caused by their Greed. L. Oscar