Les Jones

Mortgage Crisis > Mortgage Fraud Arrests

Associated Press - Hundreds swept up in mortgage fraud arrests:

Across the country, reports of mortgage fraud have soared over the past year as the subprime mortgage market collapsed and defaults and foreclosures soared.

Banks reported nearly 53,000 cases of suspected mortgage fraud last year, up from more than 37,000 a year earlier and about 10 times the level of reports in 2001 and 2002, according to the Treasury Department's Financial Crimes Enforcement Network.

The most common type of mortgage fraud was misstatement of income or assets [AKA liar loans - LJ}, followed by forged documents, inflated appraisals and misrepresentation of a buyer's intent to occupy a property as a primary residence.

Compare this with what real estate adviser John T. Reed has been saying for years:

On one, which was apparently typical, the documents seem to show that Allen lied to the first-mortgage lender—Bank of America—about whether there was any secondary financing (there was—a seller mortgage) and about his intention to occupy the San Francisco condo as his principal residence (He lived in Provo, UT at the time and never occupied the SF unit). At that time, June, 1981, when home mortgage interest rates were at 18%, Bank of America would only make loans to owner occupants and prohibited all secondary financing. I have their loan policy for the date in question in the book, too. My wife was a loan officer for Bank of America at the time. [Note to bogus gurus: do not brag about deals that you do not want me to look into—especially in the San Francisco area. John T. Reed].

Lots of people cheated on mortgage applications in the last decade, and now that things have gone pear-shaped some of them should be worried about receiving a warrant.