MortgagesUndressed

Obvious right? Not a common problem right? Wrong!

I just came across a case reviewed on the mortgage fraud blog that illustrates what a few people will do to get into the home they want. It also shows what can happen if they cheat. I had a case very similar to this one.

Here we have a tax preparer that created phoney tax returns for clients to qualify for mortgage financing. One was closed with First Franklin.

An almost client of mine came close to doing the same thing. However, he was overcome by a last minute change of heart. He confessed to me what he had done on the day he was to close. He didn’t close, thankfully, and had to explain to his wife why they weren’t moving after all. Although he avoided the completion of the crime he lost a lot of credibility with a lot of people. He also lost a $5,000 earnest money deposit. The sellers were furious as they had vacated the home, but chose to accept the release of the earnest money deposit to them rather than pursuing other damages.

These cases often come to light when a loan becomes delinquent. At that point it may be underwritten again. New verifications may be sent to those employers, banks, etc. that provided documentation for the original file. There is also online capacity to retrieve part of you tax return information. You usually sign for the lender to obtain this information in your loan application.

When you are looking for it, it is pretty easy to find fraud.

Fraud is so serious a problem new tools to find it are being utilized regularly.

There are legitimate ways to get into a home if you just don’t qualify under conventional rules. Follow the story on Ann I recently started. http://mortgagesundressed.com/tags/anns-story/ I will expose you to different programs for this purpose. Actually First Franklin, a lender in the fraud case, offers such programs. These people probably could have qualified for a program with a little higher rate to offset the higher risk and not have defrauded the lender.

PS: What about conscience? The good news in my example, is that conscience was the driving force. This was a good young man at heart. I suppose it was a defining moment for him. I have high hopes of how he is doing now. Larry Cragun