With all of the recent publicity, hysteria and fall-out from excesses in the loan industry that we’ve seen this year, rational people might have expected a fall in the level of bad lending. Not so, apparently:
The number of fraudulent loans issued during the second quarter this year increased 45%, compared with the same period in 2007, according to the Mortgage Asset Research Institute (MARI), a service of LexisNexis.
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.
Is it too much to expect that the mortgage industry cleans up it’s act, or are taxpayers just expected to foot the bill for even more excesses on top of the $700 billion bail-out? Enough is enough - what do you think?
October 25th, 2008 at 1:21 am
Interesting post, I just wrote an article about the “Buy and Bail” issue that seems to be a big problem for lenders. We are seeing a lot of current homeowners try to purchase before they let their current mortgage go into default and it’s starting to throw up a lot of red flags with banks.