November 05, 2013 /24-7PressRelease/ -- Beware of the common mortgage fraud schemes---
Article provided by Law Offices of John D. Kirby, A P.C.
Visit us at http://www.johnkirbylaw.com
As the economy improves, the number of people looking to buy homes increases. As a result, mortgage loans are beginning to increase in California and across the nation. However, a downside to this trend is that as mortgage loans increase, so does instances of mortgage fraud. Although this type of fraud is prevalent nationwide, California has the dubious honor of having among the most instances of mortgage fraud per capita.
As an example, a San Diego woman recently pleaded guilty to recruiting so-called "investors," offering them the opportunity to buy homes with no money down. However, these "investors" were, in reality, straw buyers who were promised by the woman the sum of $10,000 for each property they purchased. The woman helped the investors secure the deals by falsifying their mortgage applications, using fake employment information and phony income information.
The woman and her co-conspirators earned millions of dollars by persuading the sellers of the homes to sell at a higher price. Once the properties were purchased by her agents, the "investors", the woman pocketed the difference in selling price and let the homes fall into foreclosure, causing the lenders to suffer losses of between $7 and $20 million.
About mortgage fraud
Although such stories have become common in the media lately, not many understand what mortgage fraud is. However, it is important to have a rudimentary understanding of the crime and its common manifestations to avoid falling victim.
Mortgage fraud is a white-collar crime that involves a misrepresentation, material misstatement or omission that is made during a real estate transaction that is relied by at least one another party. The three main types of mortgage fraud schemes are fraud for property, foreclosure rescue and loan modification.
Fraud for property is similar to the San Diego woman's acts. It occurs when mortgage applicants make false statements on their application to obtain a loan. In most cases, applicants misstate their income, employment or asset information. In other instances, applicants may illegally assume the identity of someone else and take out the loan in his or her name.
Foreclosure rescue schemes generally involve individuals preying on unfortunate homeowners. In this scheme, a person facing foreclosure receives an offer to purchase the property, purporting to allow the homeowner to stay in the house. In reality, the buyer of the property will either do nothing to stop the foreclosure or sell the property to someone else who will later evict the homeowner.
Loan modification schemes also target desperate homeowners. These schemes occur when someone offers to change the terms of a homeowner's mortgage (e.g. monthly payments or interest rate) to make it more affordable. However, the person who makes the offer often will charge exorbitant fees for this service. Once the fees are paid, the person generally disappears, leaving the homeowner in the same position he or she was before (minus the service fees).
Consult an attorney
Each year, many people are unwittingly recruited for mortgage fraud schemes that seem above board. As a result, many can face long prison sentences for their part in crimes that they did not know they were a part of. If you are accused of mortgage fraud, it is important to put forth a strong defense. An attorney can advise you of your rights and work to ensure the best possible outcome.
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