Mortgage Fraud, Fraud And Fraud

2498 Words Mar 3rd, 2015 10 Pages
Mortgage fraud is one of the fastest growing crimes in the United States. (Freddie Mac, 2015) There are three categories of mortgage fraud, fraud for housing, fraud for profit and fraud for criminal enterprise. Fraud for profit schemes are conducted by a group of people who play multiple roles in the fraud. The masterminds or initiators receive the largest percentage of the profit while others in the scheme may receive a few thousand dollars for their part in the misrepresentation. Mortgage brokers and loan processors create fictitious credit profiles and conspire with real estate appraisers to inflate property values. For-profit schemes often involve multiple industry professionals/insiders and multiple transactions. The documentation for lending will include numerous misrepresentations and omissions. Many times the borrowers involved may be unaware of the scheme, other times straw borrowers who never intend to repay the loan are used to hide the identity of the organizers of a for-profit mortgage fraud scheme. Despite relatively stables market conditions and continued low mortgage rates, stringent credit conditions and requirements are a reality for homebuyers. In times of growth, regulatory constraints have met with compliance without any trouble. When growth falls off, the financial market deteriorates and lenders then have to deal with increasing default rates. Here the regulatory capital requirements force the banks to tighten credit even more than they…
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