Mortgage Lowdown

Arizona is waking up to the fact that fraud in its mortgage industry is taking a significant toll on its real estate value. The large number of cash-back deals of late has induced a state legislation, which if passed, will make mortgage fraud a felony. The bill, introduced by Sen. Jay Tibshraeny of Chandler, seeks to punish offenders with up to 10-year sentences.

Cash-back deals are swindles that work by obtaining mortgages that are much more than the actual values of the houses; the difference from the real value is pocketed as profit. This scam pushes up the values of all other homes in the entire neighborhood, with homeowners left to bear the negative effects associated with overpriced homes. AZ Central reports:

Only two states, Colorado and Georgia, have laws specifically regulating mortgage fraud. Most states, including Arizona, must try to prosecute the crime under general fraud laws, which make convictions difficult and less of a deterrent.

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This entry was posted on Wednesday, January 24th, 2007 at 11:10 am and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.