More on Real Estate Fraud

[Michael Harris]

To All:

Here is another example of a con/fraud perpetrated by insiders in the housing industry.

FRAUD FLOURISHES IN HOT HOME MARKET
Newspaper says cases of mortgage fraud have more than doubled; 80% involve industry insiders.
October 5, 2005: 9:25 AM EDT

NEW YORK (CNN/Money) - Beware of that over-friendly real estate agent or buttoned-down appraiser. They may be nothing more than con artists.

As the housing market stays hot, more and more people are falling victim to mortgage fraud, according to a report in Wednesday's USA Today.

The newspaper said the FBI investigated 642 cases of mortgage fraud in the first half of 2005, compared to 534 in all of 2004. And the number of cases at the IRS doubled from 2001 to 2004. The report said 26 states have serious mortgage fraud problems.

"Criminals are opportunists," William Matthews of the Mortgage Asset Research Institute told the newspaper. "If you've got a booming market, they are going to get away with more fraud."

Most of the frauds involve people in the industry or people posing as industry types, artificially inflating the value of homes and quickly reselling them, the article said.

The report cited a case in Atlanta where a fraud ring skimmed $20 million from inflated mortgages. The leader worked with people employed as real estate agents, mortgage brokers and loan processors and used fake identities, fraudulent documents and shell companies to buy houses and then resell them at inflated prices.

Another example involved a Kansas City group that purchased foreclosed homes at cheap prices, then artificially inflated their values using false appraisals.

The newspaper said mortgage fraud is hard to detect because 80 percent of the cases involve industry insiders.

I tried the Search function to find the other, related articles - as you can see, I was unsuccessful.

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(Moderator Note: Headline Edit Approved)

[Frederick Budde]

Michael;
I understand the Katrina stricken area is now a hotbed of housing fraud. Realtors and other "investors" have moved in with a myriad of schemes.

[Michael Harris]

Fritz,

The entire housing industry is in trouble. There is mortgage fraud and appraisal fraud rampant throughout the country.

If the scumbags are trying it everywhere, it must be of epidemic proportions in a disaster area.

[Frederick Budde]

Fritz,

The entire housing industry is in trouble. There is mortgage fraud and appraisal fraud rampant throughout the country.

If the scumbags are trying it everywhere, it must be of epidemic proportions in a disaster area.

Today's news is that contractors who were called in to assist in clean-up are not being paid what they were promised. After the fact, of course!

[Johnny Ginsberg]

According to one of my TV Station's News Websites in my city, there's real estate fraud occuring in selling/buying of homes. For example: a $250,000 home sells for $280,000. The buyer pockets the difference after the sale is final and recorded on the HUD-1 Settlement Statement. Apparently this is a federal offense, as no other money is supposed to change hands after the sale is final and recorded. All realtors in Minnesota have been cautioned against this action.

I thought this would be interesting to relate, since this involves real estate fraud.

[Michael Harris]

Johnny,

That is just another aspect of the fraud rampant in the housing industry.

Several kinds of mortgage fraud, apraisal fraud, etc. is going to kill the market before too long.

[Hugh Goodwyn]

Michael then you are say that the apraisers are not being honest when they quote a price.I did not know it was this bad thanks for this hint.

[Michael Harris]

Hugh,

Since I am in the loan signing business, I get reports on the entire home loan industry.

The issue is undue pressure by the mortgage lenders for appraisers to bring in a higher appraisal than they normally would. In general, appraisers have been a little conservative - it protected the mortgage industry. Now, the lenders want higher appraisals so the loans are approved more quickly and easily. The appraisers who do not puff the appraisals at least a little do not get repeat business.

The higher appraisal looks good to the seller or refinancer, but the market prices are climbing far beyond what is realistic. The entire industry will go Boom soon.

[Hugh Goodwyn]

When you say boom soon what do you mean.I did look at the exeptions to VA code on PI work and it said that if you are a appraiser then you could do PI work in VA.Maybe this should be the best work for me.