For the 6TH straight quarter Mortgage application fraud is on the upswing according to the National Mortgage Application Fraud Risk In
dex released by CoreLogic, a real estate data firm. CoreLogic developed the index based on residential mortgage loan applications processed by CoreLogic Loan Safe Fraud Manager, a predictive scoring technology. Based on their findings, the index has increased for all of the last six consecutive quarters. The home mortgage field is up by 16.9 percent in the most recent 12-month period.
Generally purchase applications are a higher fraud risk compared to refinance applications. Purchase applications have made up 62 percent of all transactions in the first quarter, compared to 58 percent in the first quarter last year. As these purchase applications rise, and refinance applications decrease; this causes the increase to the index.
The six major Mortgage Fraud components include:
- Undisclosed Debt
- And all types of application fraud
Mortgage Fraud includes various illegal schemes involving some type of misrepresentation or misstatement on mortgage documents. For example, “occupancy misinformation” is when applicants deliberately misrepresent their intended use of the property. This includes cases in which borrowers lie about their intended use i.e. live in it vs rent it out. Applicants who lie about the intended use often times do it because they qualify for a lower down payment and interest rate whereas investors have to place larger down payments and pay higher rates. There are also misrepresentations on the sources of down-payment money as well as income and employment, undisclosed debts and identity theft.
The massive Equifax breach and unprecedented range and depth of the information stolen can put home sales at risk. Scammers can use stolen social security numbers to open up new credit cards and rack up debt under the victims’ names, making it a long and strenuous process to remove negative items from the credit reports. Proving it wasn’t you will not be easy; as private mortgage investors we recommend you check if the Equifax breach affected you, by going to https://trustedidpremier.com/eligibility/eligibility.html
If you were impacted, you can get a free copy of your credit report from the three major credit bureaus at www.annualcreditreport.com. All private M.I.s should advice their clients to consider placing a security freeze or lock your credit report.
You can place a fraud alert on your credit reports with all three major bureaus by clicking https://www.alerts.equifax.com/AutoFraud_Online/jsp/fraudAlert.jsp
Your request to place an initial 90 day fraud alert or an active duty alert on your credit file will be sent directly to both Experian and Transunion so you don’t have to contact them separately.
The relevance for you to take action as a homeowner or homebuyer at the very least is to be aware that any form of mortgage fraud –including misrepresentation of occupancy –may constitute bank fraud, which is a federal crime and punishable by law. The Fraud Enforcement and Recovery Act (FERA) enacted in 2009 expanded the reach of federal law enforcement officials in enforcing mortgage fraud laws. Sentences under FERA can include a $1 million in fines and 30 year prison sentences. Some states also have laws that address crimes related to mortgage fraud.
Identity thieves now possess millions of Americans’ social security numbers, driver’s licenses, credit card numbers and home addresses and more. They may also be able to create fake identities and be able to fool lenders into granting home equity loans and other mortgages in their names, making off with thousands of dollars in the process. Freezing your credit report will make it much more difficult to take a loan out in your name if the files are locked down.
Continue to monitor your credit, it is well worth signing up with a credit monitoring service it is certainly easier to undo a fraudulent account within days rather than waiting months to address it.
AMI Lenders, Private Mortgage Investors in Houston, takes pride in providing alternate sources of financing for all types of properties in residential and commercial fields. Our licensed loan originators have over sixty years combined experience providing better service and better hard money lending rates in Houston and surrounding cities.
We are Houston's Private Mortgage Investors who funds most of our loans and responds quickly to hard money loans for bad credit usually within 24 hours.