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August 27, 2014

Mortgage Fraud: Most Active States & Schemes

Homeownership
Mortgage Fraud

The most active states for mortgage fraud today include California, Nevada, Arizona, Florida and Michigan, report Freddie Mac's fraud investigators.

They say one of the most active mortgage fraud schemes in these states - and across the country - lures borrowers into paying big fees to a "specialist" for a quick loan modification. The borrower may get a bill, but no modification. Borrowers can protect themselves by working with their lender or a HUD-approved housing counselors who don't charge fees.

In another top scheme, fraudsters add to potential taxpayer losses by arranging short sales at artificially low prices to accomplices who immediately resell them at higher prices, sometimes on the same day, to buyers the fraudsters kept hidden from the home seller (and Freddie Mac). 

Investigators also report misrepresentations by buyers of REO (foreclosed) homes among today's most common mortgage frauds.

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