What Is Mortgage Fraud For Profit
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Understanding Mortgage Fraud for Profit
Summary
For those struggling with mortgage payments, be cautious of fraudulent offers promising help. Here’s what you need to know.The Case of Sally
In 2007, Sally was overwhelmed with her mortgage payments and soon received a foreclosure notice. Then, a man offered her a solution: a $40,000 check to help with her bills, supposedly ending her foreclosure worries. Trusting him, Sally signed paperwork at a Maryland title company and began making payments to District Properties. However, nine months later, she faced eviction, realizing she no longer owned her home and was simply a tenant. To reclaim her house, she’d have to pay $360,000?"triple her original mortgage. Unfortunately, her income and credit didn’t qualify her for this. The man curtly informed her of her predicament and hung up.
The Scam Explained
Sally fell victim to mortgage fraud for profit, also known as equity skimming, a scheme orchestrated by multiple players: a mortgage broker, real estate agent, appraiser, investor, straw buyer, and bird dog. Each took a share of Sally’s home equity. In the end, her house was foreclosed by Subprime Mortgage Co., while the fraudsters pocketed over $100,000.
Unlike predatory lending, where a loan with exorbitant fees and high interest is forced on a borrower, mortgage fraud for profit is a complex scam. It involves inflated appraisals, falsified loan applications, equity skimming, property flipping, and sometimes identity theft. The “borrower” is typically a straw buyer without any intention of occupying the home. Payments are made by the investor until they stop, leading to foreclosure or a flipped property sale for further profit.
How the Scheme Works
1. Identifying Properties: A bird dog locates distressed homes by scrutinizing real estate records and scouting neighborhoods. Upon finding a target, the address is shared with the investor for a fee.
2. Straw Buyers: A straw buyer, often with good or falsely enhanced credit, plays the role of the purchaser. Sometimes, this involves stolen identities, where the true owner only learns of the fraud when denied credit or when the transaction surfaces in a credit report. Other times, straw buyers are lured by promises of quick cash for using their names. Unfortunately, such involvement often results in damaged credit, legal investigations, or conspiracy charges.
3. Industry Insiders: Essential players include mortgage brokers and appraisers who are usually active participants in the fraud, receiving compensation for falsifying necessary documentation. Title company employees who manage closing documents and fund disbursement, and professionals with access to credit report systems or software creating fake W-2s and pay stubs, also play roles in this scheme.
According to the FBI's 2006 Financial Crimes Report, 80% of mortgage fraud losses involve insiders from the industry, making it a widespread issue. Homeowners like Sally, facing foreclosure, can be easily misled by seemingly trustworthy professionals. This underscores the importance of stringent government regulations to uphold industry standards and safeguard consumers.
Conclusion
Mortgage fraud for profit exploits the vulnerabilities of homeowners in distress. By remaining informed and cautious, individuals can protect themselves from falling prey to such schemes. Trust professionals, but verify their intentions and credentials.
You can find the original non-AI version of this article here: What Is Mortgage Fraud For Profit .
You can browse and read all the articles for free. If you want to use them and get PLR and MRR rights, you need to buy the pack. Learn more about this pack of over 100 000 MRR and PLR articles.