Fraud taking off with the Real Estate boom

[Scott]

This is a pretty good read.

I have actually dropped a few customers because I caught on to them thinking about stuff like this. It's not worth making a little extra money just to destroy your reputation in the long run.


__________________________________________________ ___________



If you needed to stretch your actual income to qualify for a mortgage to buy the house you love, would you consider telling a little white lie, fibbing to your lender? What if your loan officer thought up some creative ways for you to get into a house you couldn't otherwise qualify to buy, such as cooking up some faked W-2s or credit scores, or submitting false banking and tax documents? Would you?

Whatever your answer, the sobering fact is that thousands of people across the country - ordinary home buyers and loan industry personnel - no longer are playing the mortgage game straight.

Think of it as the little-publicized, seamy underside of the billowing national housing boom: widespread and growing fraud in home loan applications, where sticker-shocked buyers lie about their incomes and assets, and where mortgage brokers create what the FBI calls "air loans" - fictitious borrowers, houses, addresses, credit reports, bank statements and income verifications.

It is a multibillion-dollar problem, largely unseen by the most consumers and loan officers who wouldn't think of taking part. But a new national report confirms the mortgage industry's fears: Fraud appears to be growing faster than ever. The FBI received more than double the number of mortgage-related "suspicious activity reports" between 2003 and 2004, and the problem is spreading from the biggest cities to smaller metropolitan areas.

The top cities for mortgage fraud last year, according to a new report by the Mortgage Asset Research Institute in Reston, Va., were Atlanta; Dallas; Denver; Orlando, Fla.; Charlotte, N.C.; Memphis, Tenn.; Scranton, Pa.; Columbus, Ohio; Houston; Salt Lake City; and Louisville, Ky. Although most cases of fraud involve multiple misrepresentations, the institute's study - based on pooled industry fraud data as well as FBI statistics - found that falsehoods on applications by individual borrowers constitute the most common problems (56 percent of all cases), followed by bogus or incorrect tax and financial documents (33 percent), fake employment verifications (12 percent) and fabricated or intentionally inflated appraisals (10 percent). Here are some of the patterns investigators found most common.

Stated income problems

Known in the industry as "liar loans" or NINAs (no income, no asset verification), these programs were originally designed for creditworthy professionals and owners of small businesses who prefer not to show all their documentation on income, investments and other financial assets.

Stated income means you simply state your income, estimate your assets - not prove them with documentation - and that's what's accepted by the lender for underwriting purposes. Typically stated income loans also carry a slightly higher interest rate or fees to compensate for the perceived higher risk.

But during the housing boom, stated-income and NINA mortgages routinely have been extended to applicants with shaky credit and insufficient incomes. In one case, the report said, a Florida mortgage broker worked hand in hand with a NINA borrower, changing the applicant's alleged income as he shopped for loans from different lenders. When challenged, the broker said: "I thought that with stated income loans you could claim an income as high as necessary" to obtain the size loan needed.

Property-flipping fraud

If you can assemble a team of dishonest appraisers, title agents, realty agents and investors, you can fool lenders by flipping properties at hoked-up prices and loan amounts. Federal investigators in Ohio recently broke up a ring of realty and title industry scamsters. They would buy houses, then fabricate new appraisals to flip them to new buyers using appraisals that effectively doubled the property value within a few weeks. Lenders who extended mortgages based on the excessive valuations were defrauded.

Disinformation

If a buyer's income doesn't make the grade, sometimes unscrupulous loan officers will help them fake it. In a small Michigan town, fraud investigators tracked seven mortgages to a single office where the broker showed the borrowers employed at a company owned by the broker. Five of the loans contained CPA verification forms that were forged.

Working with the Mortgage Asset Research Institute and the FBI's financial crimes investigation teams, the home loan industry is mounting a major effort to spot the telltale hints of fraud before mortgages are closed or go into default.

For its part, the FBI is putting out the word: If you attempt to defraud or lie to your lender and you get caught, you are likely not only to pay back any money you received illegally, but spend time in the slammer to think about it.

[Joe]

The problem is that poeple are stupid.

The "how much to spend" rules are there for a reason. If you're dumb enough to lie about income to get more house then you can really "afford", then fuck you. I'll be glad to take it off your hands for less then you bought it for when you can't afford the home in 90 days... :roll:

This kind of thing along with the intrest only loans will catch up to people soon... I am frothing at the mouth for that day... Buy Buy Buy... :-D

[Scott]

This kind of thing along with the intrest only loans will catch up to people soon... I am frothing at the mouth for that day... Buy Buy Buy... :-D



Join the crowd. :lol:

Intrest only loans are fine for some people in some situations.

[Joe]

Join the crowd. :lol:

Intrest only loans are fine for some people in some situations.

Agreed, like my rental properties... :naughty:

My main home is a 30yr fixed though... :)

[s10_male]

Its called you do a NO DOC- some people need this, because most of there income under the table- tips ect.

[XtremeVision]

The problem is that poeple are stupid.

The "how much to spend" rules are there for a reason. If you're dumb enough to lie about income to get more house then you can really "afford", then fuck you. I'll be glad to take it off your hands for less then you bought it for when you can't afford the home in 90 days... :roll:

This kind of thing along with the intrest only loans will catch up to people soon... I am frothing at the mouth for that day... Buy Buy Buy... :-D



its not fraud about how much u can spend, the stated programs are there for people who are in cash business or in business where they are not showing all there income or who write off 99% of there income on there tax retruns....and fraud in the mortgage business has been going on forever, its soo easy to change a w2 or to rid of 30 day lates on a VOM...its nothing new...

[s10_male]

This kind of thing along with the intrest only loans will catch up to people soon... I am frothing at the mouth for that day... Buy Buy Buy... :-D

I like the 5 yr ballon- lets investor buy a house to rent out, and not worry about if the person decide not to pay rent. Only problem is dumping it before the 5 yrs.

[Frances]

My old boss mentioned something about faking some W2's so they could get financed for the house they wanted to buy. And he said the realtor/investor was the one who suggested it and theat he would hook them up with a martgage company that would accept it. :roll: Deal fell through when the appraisal came in $30,000 below what the investor was asking.

I agree with Joe, people don't think about it long term and if they will really be able to afford it. I have plenty of friend who have interest only loans b/c it made it more affordable for them - not b/c they're planning to use it as an investment. At some point, they will be screwed.

[Scott]

its not fraud about how much u can spend, the stated programs are there for people who are in cash business or in business where they are not showing all there income or who write off 99% of there income on there tax retruns....and fraud in the mortgage business has been going on forever, its soo easy to change a w2 or to rid of 30 day lates on a VOM...its nothing new...



"business where they are not showing all there income" = fraud



"who write off 99% of there income on there tax retruns." = fraud



"and fraud in the mortgage business has been going on forever"

No one said it wasn't and because it has been going on a long time doesnot mean it is o.k..



"its soo easy to change a w2 or to rid of 30 day lates on a VOM...its nothing new"


I will not ask why you say that so easily.

[Frances]

"business where they are not showing all there income" = fraud



"who write off 99% of there income on there tax retruns." = fraud



"and fraud in the mortgage business has been going on forever"

No one said it wasn't and because it has been going on a long time doesnot mean it is o.k..



"its soo easy to change a w2 or to rid of 30 day lates on a VOM...its nothing new"


I will not ask why you say that so easily.

+1 I was thinking the same thing. I'm sure the IRS would be interested to hear the logic.

[XtremeVision]

"business where they are not showing all there income" = fraud



"who write off 99% of there income on there tax retruns." = fraud



"and fraud in the mortgage business has been going on forever"

No one said it wasn't and because it has been going on a long time doesnot mean it is o.k..



"its soo easy to change a w2 or to rid of 30 day lates on a VOM...its nothing new"


I will not ask why you say that so easily.

figured u would be the first to respond....

Its not fraud to not show all the income, its just hiding some of it from uncle sam....i am sure you dont get any kick backs from any lenders or anything you deal with.....RIIIIGHT..

and if you can legitimatly write off expenses on your tax returns and claim 30gs when you really made 110k, there is nothing wrong with that...thats what a smart business man does...dont act like your mr fuckin straight edge here...

people need to understand, stated programs are not fraud, lenders are the ones offering them, so obviously they think its ok...just like if you dont prove your income and go to the car dealer with a 750 score, they dont give a fuck what your job is, because obviously you know how to pay your bills or you wouldnt have a 750 score, doesnt mean its fraud...

[Scott]

i am sure you dont get any kick backs from any lenders or anything you deal with.....RIIIIGHT..



Not a one, ever. I will gadly bet that on the life of any of my family members.

Again I have no need to make a coupe of extra dollars at the expense of looking shady or loosing my license.

On the other hand you seem to be well versed on the topic.


and if you can legitimatly write off expenses on your tax returns and claim 30gs when you really made 110k, there is nothing wrong with that...thats what a smart business man does...dont act like your mr fuckin straight edge here...


Legitimatly write off expenses like you have described is a oxymoron and again = fraud. It is not smart business it is actually quite stupid considering the penalty vs. what you think you have saved.

"Mr. Fuckin Stright Edge", again you speak so elequently and uninformed again. You have no idea how by the rules I play. I have a family to feed and kids I need to look in the eye at night without feeling like a dirt bag. On the other hand I do not think the same applies to you. So enjoy screwing the system, it will bite you in the ass one day. :thumbdwn:

Now I suggest getting back on topic and leave your personal garble out because your constant negativity and hardass behavior on TR has been noted in the past by others and you are not far from the point of no return.

[XtremeVision]

Not a one, ever. I will gadly bet that on the life of any of my family members.

Again I have no need to make a coupe of extra dollars at the expense of looking shady or loosing my license.

On the other hand you seem to be well versed on the topic.





Legitimatly write off expenses like you have described is a oxymoron and again = fraud. It is not smart business it is actually quite stupid considering the penalty vs. what you think you have saved.

"Mr. Fuckin Stright Edge", again you speak so elequently and uninformed again. You have no idea how by the rules I play. I have a family to feed and kids I need to look in the eye at night without feeling like a dirt bag. On the other hand I do not think the same applies to you. So enjoy screwing the system, it will bite you in the ass one day. :thumbdwn:

Now I suggest getting back on topic and leave your personal garble out because your constant negativity and hardass behavior on TR has been noted in the past by others and you are not far from the point of no return.

theres no penalty for your CPA deducting expenses...maybe you should learn a little more about the business world before you discuss it...and funny thing is, I never said I am the one screwing the system, I just know how it works, I do shit by the book, so no worries here....i do have my CPA help me out in all ways possible and its the smart way to have it done...costs me quite a bit of money but its well worth it....

and the part about hardass behavior, thats a joke scott, u are allowed an opinion just as i am, you use your power as an admin on here just like a crooked cop does...you just threaten people when they but heads as you dont want them opening there mouth and making you look bad....its nothing about being a hardass, i dont claim to be one but I am allowed an opinion just like everyone else on the board...sorry i am not in the "circle" of friends that can say as they please and nothin happens...

[Scott]

theres no penalty for your CPA deducting expenses...maybe you should learn a little more about the business world before you discuss it......


:lol:

Somehow your above statement about business sounds funny coming from you. And again there goes your hardass behavior again.

FYI I have two accountants and I have my own corporation to keep my Real Estate and other businesses under. Again you speak uninformed.

Where did I say there was a penalty for deducting expenses ? Just the way your are describing doing it is the problem. I guess because my accountants are not shady puts me at a disadvantage, sucks to be honest and hard working. :cry:






and the part about hardass behavior, thats a joke scott, u are allowed an opinion just as i am, you use your power as an admin on here just like a crooked cop does..you just threaten people when they but heads as you dont want them opening there mouth and making you look bad.


Everyone is allowed a opinion the problem with you and yours is it is almost always in the form of some condesending assholish remark and not just isolated to me either. Note you are the one that made the personal references with no point of reference in this thread and you continue to do so. Why ? There is your difference that you always gladly overlook.

Find me someone I have "threatened" for the reasons you have stated ?

If I was a "crooked cop" trust me we would not be having this conversation. :lol:

Thanks for furthering my point.

Now back to the topic if you have anything relative to add.

[_Charles_]

Wow...this whole thing is in the wrong forum...but...whatever :dunno:

[XtremeVision]

whats funny about me making a statment about business scott? oh, wait was that a personal attack over somthing that you dont know shit about?

[s10_male]

:lol:


FYI I have two accountants and I have my own corporation to keep my Real Estate and other businesses under. Again you speak uninformed.







IF you have a real estate license might want to check into this http://www.wlgweb.com/ (http://www.wlgweb.com/)

[Nikon]

whats funny about me making a statment about business scott? oh, wait was that a personal attack over somthing that you dont know shit about?
This forum is for sound advise, not questionable. If the FBI is getting involved, then it's not sound. Thats why Scott stepped up and gave you sound advice.

Hiding any of your income from Uncle Sam is tax evasion...

http://www.irs.gov/compliance/enforcement/article/0,,id=106478,00.html

Writing off 99% of your expenses is tax evasion...

http://www.irs.gov/businesses/small/article/0,,id=106549,00.html

End of story.

[XtremeVision]

This forum is for sound advise, not questionable. If the FBI is getting involved, then it's not sound. Thats why Scott stepped up and gave you sound advice.

Hiding any of your income from Uncle Sam is tax evasion...

http://www.irs.gov/compliance/enforcement/article/0,,id=106478,00.html

Wiring off 99% of your expenses is tax evasion...

http://www.irs.gov/businesses/small/article/0,,id=106549,00.html

End of story.


wasnt being literal when I said 99%...but ok...hes saying its wrong to write off as much as legally possible and I disagree, gotta take advantage of every write off possible ...its pretty shitty paying 35-40 % of income to the IRS...

[Amortized]

good post Scott. Just had a gentleman today who called me and tried to "convince" me to commit fraud.
Him: I saw your add about buying with no money down
Me: "Yeah, you need a 580, 2 years employment prefered, owner occupied blah blah blah."
Him: Yeah, I'm gonna rent it out.
Me: In that case this would be a non-owner occupied loan, unfortunately at this time I know of zero lenders who offer 100% LTV on a NOO. We do have investors who deal with short term aquistition that will do 100%, however the terms aren't very attractive.
Him: Oh, well lets just say I'll live in the house.
Me: Sir, I can't do your loan, you originally told me your intentions to rent it out.
Him: Um, oh, I see you run a clean shop.

I paraphrased somewhat, however the entire conversation he acted a little on the "not so bright" side, as if he may have been playing dumb. The last line he said "Oh, I see you run a clean shop", was said completely different manner/tone/accent. I'm under the impression he was either in this business, or was a state inspector trying to knab unscrupulous brokers. I'd much rather not deal with that headache. There are enough things in this business to worry about, I don't need the added baggage that comes with fraud.

[Scott]

This forum is for sound advise, not questionable. If the FBI is getting involved, then it's not sound. Thats why Scott stepped up and gave you sound advice.

Hiding any of your income from Uncle Sam is tax evasion...

http://www.irs.gov/compliance/enforcement/article/0,,id=106478,00.html

Writing off 99% of your expenses is tax evasion...

http://www.irs.gov/businesses/small/article/0,,id=106549,00.html

End of story.



:werd:

:headbang:

:owned2:

[moldyhands]

ok, what i really think this thread needs is for all those who've committed real estate fraud to chime in on how they've done it, and any pointers they have to not get caught. then scott will help us all pull if off... right scott?

[Scott]

ok, what i really think this thread needs is for all those who've committed real estate fraud to chime in on how they've done it, and any pointers they have to not get caught. then scott will help us all pull if off... right scott?



:lol:

I think you could PM one person and learn a lot more about ways to commit fraud. ;)


I like you a lot more these days Moldy now that there are no elections. :dbird:

[moldyhands]

:lol:

I think you could PM one person and learn a lot more about ways to commit fraud. ;)


I like you a lot more these days Moldy now that there are no elections. :dbird:
don't get confused, i'm still a liberal fuckwad. but people that know me realize i'm a cool liberal fuckwad:lol:

clinton in 2006!!!!

[Epicman]

good post Scott. Just had a gentleman today who called me and tried to "convince" me to commit fraud.
Him: I saw your add about buying with no money down
Me: "Yeah, you need a 580, 2 years employment prefered, owner occupied blah blah blah."
Him: Yeah, I'm gonna rent it out.
Me: In that case this would be a non-owner occupied loan, unfortunately at this time I know of zero lenders who offer 100% LTV on a NOO. We do have investors who deal with short term aquistition that will do 100%, however the terms aren't very attractive.
Him: Oh, well lets just say I'll live in the house.
Me: Sir, I can't do your loan, you originally told me your intentions to rent it out.
Him: Um, oh, I see you run a clean shop.

I paraphrased somewhat, however the entire conversation he acted a little on the "not so bright" side, as if he may have been playing dumb. The last line he said "Oh, I see you run a clean shop", was said completely different manner/tone/accent. I'm under the impression he was either in this business, or was a state inspector trying to knab unscrupulous brokers. I'd much rather not deal with that headache. There are enough things in this business to worry about, I don't need the added baggage that comes with fraud.

I know a couple of lenders that will loan 100% on NOO. Shoot me a PM monday and I'll go through my paperwork and tell you who they are.

[Epicman]

I like you a lot more these days Moldy now that there are no elections. :dbird:


You know, I was thinking this the other day. Elections bring out the worst in people. :lol:

[number_2]

don't get confused, i'm still a liberal fuckwad. but people that know me realize i'm a cool liberal fuckwad:lol:

clinton in 2006!!!!

clinton who... for what... in 2006?

:?

[moldyhands]

clinton who... for what... in 2006?

:?
ha ha ha, god i was drunk!!!

i was joking and meant to mean hillary clinton in 2008 for president. not that i'd automatically vote for her, but i know scott would automatically not vote for her,

[number_2]

:lmao:

i kinda figured, but it's not like you to f up something like that.