Mortgage Fraud On the Rise In Buying and Foreclosing

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore

One might be inclined to think that mortgage fraud would start dropping off as the looming credit and mortgage crisis it helped create, continues to lurch forward. Although it is a reasonable thought, the reality is much different- mortgage fraud has in fact increased over the last year and a half.

According to a story published by the Baltimore Sun, the Mortgage Asset Research Institute recently released a study that shows homebuyers’ fraud was up 40% during the first three months of this year from 2007. Furthermore, Maryland ranked third on the list for highest rates of homebuyer’s fraud in the country, along with Michigan and Illinois.

What this means is that potential homebuyers are submitting false information regarding their income, credit and taxes etc… and are oftentimes encouraged to do so by the lender. As a result, borrowers are procuring mortgages they cannot afford and end up foreclosing on the home in as little as three months later.

For homeowners who are at risk of foreclosure, the situation is even worse. Federal mortgage and foreclosure fraud has doubled over the past year according to a report published by the Federal Bureau of Investigation. Scams offering fast help and quick solutions to mortgage debt coerce the homeowner into signing over the deed to their home without even realizing it.

Key warning signs of fraudulent foreclosure lending include “guaranteed” buy outs, “quick cash” for homes, sale and leaseback, default “cures” and credit repair. These scams can allow the lender to take control of the home and/or steal its equity. Homeowners should are well advised to review all documents in full and seek consultation from an attorney or a HUD certified housing councilor before signing anything.

NHS of Baltimore’s Executive Director, Felix Torres, summarized it best when he said, “Helping people with foreclosure is very difficult; some people have really impossible situations, so if anyone tells you it's going to be really easy and quick and all you have to do is pay a few bucks---run away."

There is some good news however. Homeowners in need of urgent foreclosure intervention can seek help from a HUD certified lending agency such as Neighborhood Housing Services of Baltimore. We offer free consultation as well as fair and responsible lending opportunities. Our main concern is to ensure our clients’ financial success by helping them own a home for the first time, or by avoiding foreclosure.