Recently we read about a real estate agent in Florida who allegedly inflated the prices of nine homes in Tampa and North Pinellas, so buyers could get larger loans. In most cases, the homes were mortgaged for approximately $100,000 more than their true market value! Should the allegations prove true, then these transactions definitely fall into the category of loan fraud and the perpetrators involved should be brought to justice!

Loan fraud is a criminal activity that capitalizes on a human weakness commonly referred to as greed. In the above example, the buyer pays more for a property than its worth, and the seller agrees to refund the overpaid premium back to the buyer, usually outside of closing.

On the surface, it would seem that everyone involved benefits... Buyer(s) pocket extra cash. Seller(s) unload their property at or near the asking price. The real estate agent(s) involved are paid more commission dollars. A loan officer makes another loan and the lender gets more interest over the life of the loan.

What really happens is that, often the lender who services the loan is unwittingly coerced into loaning more money than the collateral value of the property.

When the borrower defaults, which happens more often then not in these types of schemes, the lender is unable to recover the loss they incur.

Loan fraud is a criminal activity and as such...

• Inflates housing values, impacting affordability.

• Artificially inflates property taxes.

• Damages our profession.

• Ethical real estate agents lose business to dishonest agents.

• Over stimulates foreclosure activity which can hurt neighborhoods as homeowners default on inflated loans.

The bottom line... Everybody loses! The following statement by the FBI says it best: "It is illegal for a person to make any false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution."

Click here for more information about loan fraud and feel free to contact us for information relative to the Moore County, North Carolina area.

With our highest regard,                                                           

Wayne and Lynda Gomillion
"The Pinehurst Home Team"

"The friendship and referrals of those we serve is the foundation of our success."
 

Member of the Real Estate Intelligence Network

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