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Mortgage lender settlement with FTC highlights need for lending vigilance

[Jun 7, 2010.]


Reuters reports that Bank of America has settled for $108 million with the Federal Trade Commission (FTC) on behalf of former mortgage lending giant Countrywide. This news demonstrates the importance of borrower vigilance against improper lending practices and possible mortgage fraud.

Mortgage fraud: Don't get involved in a crime

Mortgage fraud can occur in several ways. Mortgage lenders may "assist" borrowers with falsifying income and employment information in order to qualify them for a mortgage, or mortgage lenders may perpetrate fraud by assuring unsuspecting borrowers that applying for a mortgage is easy and that they needn't worry about qualifying, while providing a false loan application. Borrowers may also falsify information when applying for mortgage loans. Any form of mortgage fraud is a crime and may be punishable by steep fines and incarceration. Here are some tips for avoiding mortgage fraud.

  • Learn about the mortgage loan process: Applying for a mortgage can be a complex process, and requires verification of your income, assets and employment. If a mortgage lender skips over this information, or suggests altering information you've supplied, find another lender.

  • Ask questions: When confused or concerned about any aspect of applying for a mortgage loan, ask for clarification. If something seems suspicious, keep asking questions until you're satisfied. It's better to start fresh with a new lender than to participate in possible mortgage fraud.

  • Don't sign anything in blank: Signing mortgage documents in blank is similar to signing a blank check--you don't know who will cash it, or for what amount. Reputable mortgage lenders don't ask you to sign mortgage loan applications or loan documents in blank. Lenders typically ask borrowers to sign authorizations for accessing credit reports and verifying financial and employment information, but make certain you know what you're signing before doing so.

Mortgage fraud: Your next house could be the Big House

You can be implicated in mortgage fraud activity if you've signed fraudulent documents or provided false information for the purpose of getting a mortgage loan. Claiming ignorance is not a defense against misrepresenting information on a mortgage application or documents. Don't risk paying fines and exchanging your new home for a jail sentence. It's better to start fresh with a reputable mortgage lender than be involved in mortgage fraud.


About Author:

Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.

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