Beware! Mortgage Frauds On The Rise
–By Priya Jestin, Staff Writer
Real estate prices have been rising at a steady rate and have caused heartburn for more than just a few people. Many people belonging to the middle class are seeing their affordable first-home dreams going up in smoke. This rise in real estate prices has led to one more thing — mortgage fraud.
The fraud is being conducted from the most basic level — right from the appraisal stage. Fraudulent methods are used while appraising a property, which in turn inflates real estate values. Once these fraudulent values are entered into real estate multiple listing systems, they are used by legitimate appraisers for determining market values.
A recent study by FinCen shows that in the decade spanning 1996 to 2006, mortgage fraud increased about 1,400 percent! Moreover, the first quarter of 2006 showing a 35 percent increase in mortgage fraud activity over the first quarter of 2005. The report identified automated loan processing, sub-prime lending, and mortgage broker loan originations as prime “vulnerabilities” associated with suspected mortgage fraud.
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