The residential mortgage industry is estimated to have $13 trillion in loans outstanding in the United States. Unfortunately, a sizable chunk of that money is long overdue due to fraud. Some $60 billion in fraudulent loans are processed annually, according to a recent FBI report.
The losses eventually hit consumers in the form of higher loan fees, and interest rates.
As for lenders, they're spending more time on detective work than simple processing.
"The sheer volume of loan applications, tight underwriting deadlines, and the cost of due diligence are just a few of the reasons mortgage fraud is so rampant," says Richard Ware, an expert on mortgage fraud and president of Affinity Corp in West Hills, Calif. "Internet commerce and the mortgage industry's rapid move toward e-banking will also increase fraudulent activity."
Scam artists can falsify credit histories, Social Security numbers, and appraisals. They also set up offices to create false addresses and corporate histories in order to obtain loans. Once they get their hands on the money, they move to another state, says Mr. Ware.
He offers this advice to loan seekers:
*Do not sign any loan documents that are left blank.
*Verify that all information on every document is correct.
*Review all of the loan information again prior to closing.
(c) Copyright 1999. The Christian Science Publishing Society