Mortgage Loan Fraud

Home Mortgage Fraud

In the explosive home buying frenzy of the early part of this century, there was enormous pressure on buyers to come up with as much borrowed money as possible to allow them to keep pace with the escalating cost of housing. They were also keen to cash out any equity that they had in their homes.

With the boom in lending came thousands of new mortgage brokers and home loan officers. There was enormous incentive for them to close loans quickly, in as great a volume as possible and for as much money as possible because they were remunerated based on how much they could lend.

And they tended to disregard their fiduciary duty to the ultimate lender, the bank, whose interests that they were supposed to protect. A mortgage broker is just that, a broker or intermediary. It is not the broker or their company which is actually lending the money. In fact, they are being wooed by those banks to write as many loans as possible. The bank representatives were paid on commission as well, though in the case of the banks, some responsibility was being exercised by the underwriters.

With this determination to reap as much money as quickly as possible by the borrower, there was a lot of temptation for people to take advantage of the so called "liar loans", i.e. the stated income loans and the no documentation loans. And there was a lot of temptation on the part of the broker or loan officer to collude with the borrower to help them get the loan. Ameriquest was noted for its creative work with cutting and pasting bad borrower's names onto a good borrower's bank statement.

Sometimes the broker or loan officer was less determined to help the borrower in such a manner. They were just interested in lining their own pockets at the borrower's expense by imposing upon the borrower as many fees and charges as they could stand.

Bait and switch tactics are commonly employed in the industry. Real Estate Investment expert Dan Stojadinovic says "the borrower shops around for a loan with several brokers, and goes with the one who quotes the best rate or lowest closing costs or whatever other criteria. But then, just before closing, those figures change.

"What is the borrower going to do, back out of the transaction that they have been nursing through for the last thirty days, perhaps jeopardizing their ability to house themselves? No, of course not, they are just going to have to absorb the additional cost because the broker they chose was willing to lie larger and better than the other brokers at the very start of the process. The brokers have got the borrowers painted into a corner"

Both borrowers and brokers should keep in mind that there is no statute of limitations on loan fraud, so if you lie about some material facts on your loan application or a broker fabricates some supporting evidence on the application, then someone could be in trouble. And as far as I know, the bank doesn't have to suffer a loss for you to be liable. So "no harm, no foul" doesn't apply.

Victim of Mortgage Loan Fraud?

If you have a story about mortgage loan fraud, then please contact us and we will publish it here. You may be able to get some satisfaction from warning others or from shaming your victimizers.

From Claire St.Laurent

Bait & switch tactics were used on me.There were to be no colsing coast,Well,10,000.00 closing coast is what I ended up paying. I am a Grandmothe of 6 and I am frightened to death that the bank will end up with my home.Also, the man that came to my home with the paprs to sign arrived at 9:30pm. I felt so pressured to sign the papers that I let him in. There is alot more to my story,however,I am worried am apprehensive and concerned about my future. Please feel free to call me. I will be gad to tell the rest of what has and is stll happening to me. Sincerely