mortgage fraud presentation
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Mortgage Fraud: Causes and Consequences
Presented by Ed Rybczynski
Fiduciary:
Someone who is legally obligated to place the interests of someone else ahead of his or her own.
Federal prosecutors used the word often.
Accountability:
• You can’t say that you didn’t know.
• You can’t say that you didn’t understand.
• You can’t say that you can’t remember.
“It is a crime to knowingly make false
statements to the United States on this
or any other similar form. Penalties
upon conviction can include a fine and
imprisonment.”
Warning on Hud 1:
Visible arrest at
home or office
Much harsher
sentence
Mid security
facility
Signs:
1. A new source of business appears.
Signs:
1. A new source of business appears.
2. You start to feel uncomfortable.
US Attorney, State of Michigan:
The mortgage lending process
depends on the honesty of brokers,
appraisers, and real estate agencies.
When this process is corrupted by a
team of fraudsters … the result will be
federal prosecution.
Mortgage Fraud:
Failure to disclose
ANYTHING to the
lender!
Best Practices:
• Credibility• Reputation• Fraud prevention• Litigation avoidance
Class Action
The above image was copied from the company’s website. Mortgage Bankers, Ltd. was indicted by a federal grand jury in February, 2007.
Did You
Know
Facts about mortgage fraud and foreclosure rates
Subprime mortgages account
for about 14% of all
first lien mortgages, but …
… accounted for
50% of foreclosures
4th quarter of 2006.
There's a direct correlation
between the fees and pointscharged by a mortgage broker
and …
… the incidence of
misrepresentation
in a loan package.
A mortgage is 5 X more
likely to default in the
first 6 months if …
… it’s application contains
misrepresentations.
The probability of defaultfor a subprime loan is ...
… 6 X that
for a prime loan.
It's estimated that mortgage
fraud losses for 2006
will reach ...
… $4.2 Billion.
In 2006, mortgage fraud
was 10 X more
pervasive than …
… credit card fraud.
Foreclosure rates
climbed 35%
in 2006!
It’s a bitter pill
to swallow!
CaliforniaFlorida Georgia Illinois Indiana Michigan New York Ohio Texas Utah
Mortgage FraudHot Spots 2006
per FBI
Captured
Nov 16, 2006
Matthew Cox
CONSUMERSDo they know enough to commit fraud without coaching from an industry insider?
Survey results:
55 percent of professionalappraisers surveyed reported feeling pressured to inflate property values by real estate agents and loan officers.
October Research (2003)
Survey results:
90 percent of professional
appraisers surveyed reported
feeling pressured to inflate property values to levels to make deals work.
October Research (2006)
In the 2006 study, 75 percent of the appraisers surveyed reported threats of “negative ramifications” for lack of cooperation.
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