Since we all buy, sell and trade in real estate, we should also be aware of the fraudulent elements and techniques. The FBI published an interesting case summary of the frauds that have been perpetrated in the ‘Operation Malicious Mortgage’, which was presented to the public in the month of June 2008. The report basically looked at 400 parties involved in fraud mortgage schemes across the country over the past three and a half months. The primary focus of the investigation was on three major types of mortgage frauds:
· Lending fraud
· Foreclosure rescue schemes
· Mortgage related bankruptcy schemes
In all the cases investigated, 173 lead to convictions and 83 were sentenced. The cumulative losses for these frauds reached $ 1 billion. The assets secured in the operation were worth more than $60 million and around 46 members took part.
The FBI’s load of cases has doubled in the year 2008 when compared to preceding three years. Amongst all the cases, there were 19 related to sub prime corporate frauds, which are being investigated. The corporate frauds usually pertain to accounting fraud, insider trading, criminal intent, non disclosure of appropriate valuation of securitized loans and derivatives.
The sub prime lending crisis is related to the frauds somewhere directly or indirectly. These sub prime loans are specially designed for people with below par credit history; the year 2008 witnessed 13 percent of all loans as sub prime loans. These sub prime loans have a heavy interest and high risk, which played a big role in seeing a value of 3.1 million foreclosures in 2008.
It is therefore advisable for all those in distress over their home mortgage repayment programs to talk only to recognized firms, or those agencies that appear on government website lists. Talking to the counselors of DUH (Department of Housing and Urban Development) also will help you understand aspects that should be kept in mind while dealing with lenders and buyers alike. Fraud always seems distant until the day it happens to you. So arm yourself with the right information and people to approach in such trying times.