According to the Mortgage Asset Research Institute, mortgage fraud has increased significantly during the past year by 42 percent. Mortgage fraud happens when brokers and loan officers participate in illegal activities to gain profit.
Mortgage brokers and loan officers earn commissions each time they get a loan application approved. However, tighter lending practices make it hard for borrowers to get a loan, which means less commission for brokers. This pushes them to engage in fraudulent activities.
To qualify for a loan, they put fake job descriptions, income, and financial assets of borrowers in application forms to make the borrower appear to have good credit standing. They even get “straw buyers” or people with good credit history to provide their own financial information in exchange for payment. This information is used in applying for the loan. Some would even resort to stealing other people’s identities.
Identity theft is a common crime committed by fraudulent loan brokers. Records show that 6 percent of fraud cases in Illinois are identity theft. Illinois ranks third, together with Maryland and Michigan, as the state with the highest number of mortgage fraud. California is at second while Florida holds the top spot.
Applicants should have a harder time getting loans approved because of the stricter measures lenders are practicing, yet scammers were still able to dupe lenders into granting them money. This is why people need to be careful in applying for loans. You have to make sure that you have a trustworthy broker or loan officer. You can avoid becoming a victim of by protecting your personal and financial information.
You can do this by making sure that no one else gets access to your credit card and bank account numbers. If you receive a call from someone claiming to be from your bank, never disclose any financial information over the phone until you have verified that you’re talking to a real representative. If you get an email from any of your financial institutions that asks you to click on a certain link to verify your account, don’t do it because it probably is a scam. Finally, report to authorities any mortgage scams you know of. One way of curbing this problem is to cooperate with the proper offices.
Last June, over 400 mortgage broker were arrested by the Federal Bureau of Investigation for charges of fraud. Hopefully, the FBI will continue to track down these scammers and put an end to the problem.
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