Breaking News :: Mortgage Fraud and Now Foreclosure Recovery Fraud
Posted by marymangold on January 30, 2008
Wow, the news is full of ripe news (or is it “overripe” news) about the investigations of mortgage fraud sweeping the country by the FBI, the SEC, the DUMB, the CONS.
As a real estate agent, I put my trust in the banks who qualify buyers for loans. But things just don’t add up for many of the lending practices.
The big tip off that something was awry in the mortgage banking industry came for me in 2006. I was working with a gal and her significant other we’ll call Samantha and Dale. Both essentially unemployed, they had purchased a home in another state based on some sort of income producing endeavor 2 years previous, and now they were ready to move to Grangeville Idaho to buy a new home. They sold the home in the other state, providing a means for sustaining their lives for a time, and producing a handsome downpayment on the new loan in Grangeville.
Both talented in their own entrepreneurial spirit, Sam and Dale found the home of their dreams and set out to buy it through one of the larger traditional banks in the country, known for its strict guidelines. Who was I to question the loan of $200,000 to a single borrower who had credit and stated income enough to purchase a $275,000 home. What bank in its right mind would lend that much based on W2’s for a couple appearing to ”not work” at all. Without question, there was no real solid business base to effectively show a consistent income stream. Sams credit not worthy, the couple pursued the purchase of their home based on the Dales credit worthiness alone.
Dale closed on the new home and they moved in, setting up their new lives, in a new town, with new people to meet.
In the meantime, I continued to question the banks sanity in the endeavor to lend such a big chunk to a couple who didn’t seem to be in a real big hurry to secure jobs. A year later, refinancing was the game plan, and the home was used as a cash cow to extract equity that could be used to purchase lots of new fun toys. Cha-ching.
Next story: Banks hiring appraisers to inflate values on homes for refinancing.
