Kerri Fivecoat-Campbell

write for you

|  Home   About  |  My Book  |  Our Little House Blog  |  Portfolio ( Article Samples )   |  Resume   |  Testimonials  |  Contact   

 

       Is Your Mortgage Lacking Morals?

BY

Kerri Fivecoat-Campbell

  

The housing industry might be slow, but there’s plenty of activity behind the mortgage-fraud scene. Here are some common cases that might affect you and how to avoid them.

You might not think that you could be a victim of mortgage fraud, but mortgage fraud doesn’t just mean that you could be a victim of a predatory lender.

  • home exterior

    Warning signs of a scam:


    • Be dubious of someone who calls you, is pushy or a fast talker, or tells you that you have to sign now or the rate will increase.

    • If the rate or fees appear high, have the representative give you your credit score and explain it to you. Compare rates with other lenders.

    • Stay away from online lenders. While some are reputable, Pleskac says it is best to be able to sit across the table with someone who is in charge of the biggest investment of your life. “You can’t do that with a computer,” he notes.

    • If you know you have bad credit and you’re still told there’s no problem, there is still a problem.

    • If they assure you that the loan will solve all your problems, beware.

    • If they tell you to inflate numbers and say, “We do this all the time,” don’t do it.

    • At closing, never leave any lines on a form blank. If it is not applicable, write N/A in the line or draw a line through it.

    If the lender pretends to care about you, but your gut tells you otherwise, always listen to your instincts.

“Mortgage fraud has many ugly faces,” says Dave Pleskac, a realtor with Reece and Nichols, host of “Real Talk with Dave” on radio 710 KCMO and Fox 4’s real estate expert.

Mortgage fraud is occurring across the country, from California, where foreclosures are up by 800 percent over the past year, to Kansas and Missouri. In fact, Missouri ranks in the top 10 states for mortgage fraud in the United States.
Mortgage fraud can be as simple as a broker or loan officer changing information on an application — inflating income, net worth or property values through appraisals — to more elaborate schemes that involve multiple parties on different levels.

“A lot of people are pushed into contributing to mortgage fraud,” says Dave, and this could mean you, the homebuyer, as well.

Mortgage fraud that involves the buyer, loan officer and sometimes the real estate agent and appraiser typically happens when someone suggests that the buyer inflate their income or net worth to qualify for a loan or when an inflated appraisal is ordered, giving the property more value than it is actually worth. This can happen at any time, during any sale, anywhere.

Legitimate real estate agents and loan officers strongly advise you to be vigilant against this practice.

Charlie Cycholl, managing partner of Midwest Capital Mortgage, with offices in Kansas City and Overland Park, says there are two types: customer-side fraud and loan officer-side fraud.

“When a consumer comes in with a set objective, such as a self-employed person doubling his income, that’s fraud,” Charlie says. “When a loan officer makes up a stated income, that’s loan officer-side fraud.”
Mortgage fraud is considered a federal offense, and it doesn’t matter who initiates the fraud; anyone who is complacent in the inflated numbers is equally guilty, say industry experts.

“Consumers shouldn’t work with loan officers who don’t have ethical or moral principals,” says Charlie, who emphasizes his company has not had a problem with loan officers “fudging numbers” but would have a zero-tolerance policy with anyone caught doing so.

Another aspect of the most common type of fraud involves inflating the property value so a consumer might qualify for a loan. “Most of the time there’s a certain amount of complacency on the part of the consumer,” he says. “The consumer typically knows what other homes in the area are selling for and they need to ask questions if something about their appraisal doesn’t seem right.”

Charlie says that to avoid being caught up in a mortgage scam involving inflated numbers, it is best to be upfront with everyone leading you through the buying process, including the real estate agent, the loan officer and the title company. “Ask the loan officer about their ethics and get it on the table,” he says. “This lets the loan officer know you are diligent and ensures everyone is on the same page.”

Questioning the process is key, says Joe Shields, president of Homestead Title Company in Olathe. Bigger mortgage schemes involve all of the players from the consumer, real estate agent, loan officer, appraiser and sometimes even the title company. Unethical mortgage brokers might even go so far as to create “straw buyers,” or buyers who don’t exist.

More commonly, if a title company is involved in a scam, a mortgage company is most likely somehow tied to business dealings with that title company. Joe advises consumers to check out everyone involved in the real estate transaction to make sure there are no ties between the real estate agent, mortgage broker, appraiser and title company.

Joe also points out if you do suspect a scam, don’t assume everyone is knowingly involved. They might just be trusting of the people with whom they are doing business.

Another typical type of mortgage fraud currently happening is the result of the refinance boom a few years ago. Industry experts say that many people who wouldn’t have normally qualified for a high mortgage due to credit problems or income were able to obtain loans through adjustable rate mortgages, or ARMs.

Many of those mortgages are now adjusting for today’s current interest rates, leaving many homeowners with mortgage payments hundreds, if not thousands, of dollars higher per month than what they were paying a year ago. Desperate homeowners seeking to save their investments and avoid foreclosure are falling for scams perpetrated by predatory lenders.

“The homeowner is basically upside down, and they can’t refinance or sell,” Charlie says. Dave adds that many homeowners see the predatory lenders, who contact them with promises of saving their homes, as “white knights.”

“They sign the papers without checking the companies out or reading what they’re signing,” he says. “What they’re doing is turning over the deed.”

The homeowners then make payments to the new lenders, who wait for the homeowners to default. Once the homeowner falls behind on their payments, the lenders swoop in and foreclose on the property.

Dave says to avoid predatory lenders by making sure the company is legitimate and by asking questions. “Also, never take at face value someone who says they will help you save your home. If it is too good to be true, it probably is,” he warns.

Home  |  About  |  My Book  |  Our Little House Blog  |  Portfolio ( Article Samples )   |  Resume   |  Testimonials  |    Contact 

Copyright © writeforyou.biz                                                       All rights reserved.