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Mortgage fraud round-up

[Aug 3, 2011.]


Reports of mortgage fraud cases continue to roll in across the U.S. as scam artists look for ways to profit during this troubled housing market. Knowing what types of fraud are out there can help consumers guard against being victimized.

Florida leads in mortgage fraud

The U.S. Attorney's Office in Miami accused 27 people this week of various mortgage fraud schemes against consumers and banks, according to the Miami Herald. The individuals allegedly participated in fraud schemes that resulted in more than $30 million in bad mortgage loans. In a couple of the cases of fraud, straw buyers used falisified mortgage loan applications to buy properties at inflated prices, allowing scammers to pocket large portions of loans made by banks.

"We keep leading the nation in mortgage fraud, and that is something we are working to stem," U.S. Attorney Wilfredo Ferrer said in a statement. "The perpetrators of this fraud have infiltrated every level of the mortgage industry."

Mortgage loan modifications

Meanwhile, New Jersey's Attorney General issued cease and desist orders to seven mortgage loan modification firms accused of fraud, according to the Star-Ledger. The companies are accused of promising to negotiate with mortgage lenders on behalf of distressed borrowers. The firms collected upfront fees in return for the service of lowering borrowers' monthly payments. However, the loan modification companies did not have the proper licensing from the state.

Other types of mortgage fraud occur and it's important to know some of the things to look for to avoid scams. Here are some signs to beware:

  • Being asked to pay upfront fees before receiving mortgage loan modification or other mortgage rescue services. Scammers frequently collect funds and disappear without providing services.

  • Being asked to lie or misrepresent yourself in some way when applying for a home mortgage.

  • Being pressured to sign over the title to your home as part of a mortgage rescue plan.

  • Being asked to pretend to be a buyer of a home that you don't plan to live in.

It is important to check out any financial professionals you plan to work with when getting a mortgage loan or trying to get mortgage relief. Ask your network of friends and family for recommendations of reputable individuals in the mortgage industry. Never accept relief from unknown individuals or companies who approach you and offer to help you with your mortgage woes.


About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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