Mortgage fraud is on the Upswing, but not from the usual sources...
Wouldn’t you think that with all the uproar over mishandled foreclosures the banks would be trying to follow the letter of the law? At least with regard to loans, if not with handling offers on REO properties.
While doing research for a copywriting client the other day, I came across a short blurb saying mortgage fraud is on the upswing. So I decided to find out more.
Since banks are demanding stricter documentation these days, and since appraisers are being super careful lately, I didn’t think they were talking about “liar loans,” but I had to see.
It turns out, they were talking about short sales, and banks that hold second mortgages.
Because the bank that holds the first mortgage gets to decide how many dollars that second lien holder will receive from the sale, those second lien holders are attempting to extort a few extra dollars illegally.
They do have the power to refuse to release their lien so the short sale can close. And they’re using that power to demand “under the table” payment. Often they don’t care if it’s the seller, the buyer, or the real estate agent who pays them. What’s important is that it doesn’t show up on the HUD-1.
They don’t want the first lien holder to know they’re getting the money.
Of course it’s illegal. And of course real estate agents who participate could lose their licenses. But that’s not the bank's concern. They just want the money.
How did we get to a point where banks are above the law?