Low Interest Rates and High Unemployment Send Mortgage Fraud Stats Soaring
Mortgage fraud has always been a stain on the housing industry, since many lenders don’t try to increase customer retention in a legal way, how it should be done, but 2012 has shown a significant increase in fraudulent activity. According to CoreLogic’s fraud index, there has been at least $12 billion in fraudulent activity in 2012 and that number is expected to increase to $13 billion by the end of the year. While mortgage fraud has increased overall, the number of people misrepresenting their employment status on mortgage applications has increased by 50 percent. Because of low interest rates and a high unemployment rate, many buyers are tempted to exaggerate their income or lie about their unemployment status to win mortgage approval.
Identity theft is the next most active segment of mortgage fraud with an increase of 44 percent since 2011. Those individuals with good credit histories are at risk of having their identities stolen and used to purchase property. Regularly checking your credit report, at least twice a year, should help to identify any suspicious activity.
Many experts fear that because of the number of distressed properties on the market and the overall increase in fraud, short sales may be the next segment that experiences an uptick in illegal activity. One of the most common short sale schemes is having a fake buyer purchase a short sale property and then resell the property back to the original owner or someone connected to the owner. Lenders have been warned to be on the lookout for these types of cons.
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