Home Buyers and Sellers Beware! Fraud and more Fraud in Illinois

Posted in Credit Notes,Financing- Loss Mitigation,Legislation by Administrator on the August 23rd, 2012

Home Buyers and Sellers Beware!  Fraud and more Fraud in Illinois

Mortgage fraud not only continues to plague the housing market, it’s on the rise.  Whether you are considering a Loan Modification or Short Sale you need to be counseled by professionals in the business.  However, who can you trust to handle your most precious financial documents and negotiate/close the transaction?

When you sit down to sign on the dotted line for your contract to sell, mortgage to buy or home loan workout you’d better make sure you aren’t a victim – that’s especially true if you are a struggling homeowner.

Federal regulations and a more vigilant mortgage industry are trying to decrease the numbers of loan origination fraud and misrepresentation cases, but fraud that targets distressed homeowners and collusion schemes are on the rise, according to the LexisNexis 14th Annual Mortgage Fraud Report.

With a shift that more often targets vulnerable homeowners, the Federal Bureau of Investigation’s (FBI) mortgage-related Suspicious Activity Reports (SARs) numbered 93,508 in 2011, up from 33 percent in 2010, according to LexisNexis.

Consumers must be particularly vigilant in Florida, Michigan, California, Illinois and New York where industry fraud and application misrepresentation is most common.

Overall, the most common types of fraud in 2011 were application and appraisal fraud/misrepresentation. With  mortgage origination’s, application and verification of deposit fraud/misrepresentation were tops.

Not unlike organized crime; collusion, involving multiple professionals running schemes, is on the rise in foreclosures, short sales and the REO market.

The mortgage industry’s Mortgage Industry Data Exchange (MIDEX), incidents of verified fraud and material misrepresentation in loan originations, reveals 7 percent of the cases involved collusion in 2009, 9.7 percent in 2010 and 6.8 percent for 2011.

“This means that not only are more incidents involving multiple professionals being noted – but, as incidents submitted to MIDEX, they are being investigated, verified and reported.   According to the FBI’s Financial Crimes Report to the Public for fiscal year 2010 to 2011, ‘Current investigations and widespread reporting indicate a high percentage of mortgage fraud involves collusion by industry insiders, such as bank officers, appraisers, mortgage brokers, attorneys, loan originators and other professionals engaged in the industry.

So, What do you do about avoiding Fraudsters?

Let’s offer the following tips:

Know your team – Given collusion is an up and coming fraud segment, it behooves you to know who is working for you.

Check out your team- A referral from a trusted source, still check references, that licensing  is up to date and see if they are involved in reputable clubs and affiliations with good standing.

Interview several real estate agents (home inspectors, title companies, mortgage brokers, etc.) and check references before you commit to one.  Sometimes the one that tells you the good and the bad is better than someone that only gives you the good side in an attempt to sway you over to them.

Another important team member, that many under rate, is the real estate attorney.  In Illinois, an attorney is a necessary for pulling Title and helps with researching zoning, violations and is your fresh set of eyes overseeing the real estate transaction.  Find the best Real Estate Attorney-he’s worth his weight.  I repeat regularly, “your divorce atty. is not a Real Estate atty”.

An attorney is hired by you to represent your interests and ensure your rights are protected. they will help you understand all the legal documents and exactly what legal liabilities you have accepted.  There’s always the right way to protect yourself and the wrong way to handle issues.  Atty’s. are there to help you stick to what is the acceptable way.  let them keep everybody in check regarding your affairs.
Know your financing representative – Don’t let someone coax you into borrowing more than you know you can afford on a long term basis, just because you can qualify for a higher amount at the moment.  Short term thinking got our economy bloated and it burst.  Long term thinking helps you plan for a rainy day and keep it all in perspective.

Know what you are signing – Don’t sign documents with missing or incorrect information, including your income, debts or length of employment. Don’t sign anything you don’t understand. If you need help, consider reviewing the documents with your real estate agent, a real estate attorney truly anyone that is a 3rd set of eyes remember if it’s too good to believe- it probably is.
Get counseled – Speaking of counselors, taking a homeowner, financial or housing class or counseling session is an investment in your investment.  Classes in investing, rental management and credit building.  There are clubs and meetups, affiliations for everything these days.  Maybe helping at the local housing authority or talking it over with friends over lunch.

Beyond a sit-down-and-listen seminar or workshop, do not keep things a secret from your friends it’s proven to be one of the best things you can do to guard against fraud, protect your homeownership and avoid falling into trouble.  Anyone that asks you “not” to discuss this “great deal” with anyone needs to back off!