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Loan Fraud on the Rise in Florida
You might assume that with home purchases and new mortgage volume off by 30 percent or more in many markets during the past year, loan fraud would be down as well. Wrong. A bench mark quarterly study released Aug. 25 by the mortgage industry’s principal compiler of fraud reports, the Mortgage Asset Research Institute, found that the number of cases jumped by 42 percent between the second quarter of 2007 and the same period this year. They ranged from hoked-up income verifications and credit reports to falsified employment records, financial assets illegally “rented” to buyers to beef up their loan applications, inflated appraisals, straw-buyer scams and a wide variety of hanky-panky schemes among sellers and purchasers designed to fool lenders. The highest numbers of fraud reports in the second quarter came from Florida, California, Maryland, Illinois and Michigan. Tough market conditions appear to actually increase pressures to commit fraud, says Merle D. Sharick, MARI vice president. “Mortgage fraud used to be a crime of opportunity,” he said in an interview. “Now it’s a crime of necessity for people who are desperate to maintain lifestyles they became accustomed to” during the housing boom years. The Internet is a key facilitator of their ... more

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