The proper name... Real Estate Fraud

The June 2011 edition of Secondary Marketing Executive cover story “Mortgage Fraud is Alive and Well” was definitely an eye catcher.  However after reading the article by Kevin Coop, the headline should have read “Real Estate Fraud is Alive and Well”.

Mr. Coop’s comments on fraud have more to do with naïve home owners and unscrupulous individuals.   Let’s not forget the real estate agents who actively seek short sale properties.  To stop real estate fraud we have seen many new laws enacted.  Unfortunately Dodd-Frank and so far the new CFPB do not address the underlying problems.  In addition, real estate agents have been given a pass. They do not have any restrictions on their income and they can still conduct blind bidding on homes.  This coupled with the government’s desire to help home owners through mortgage modifications has created this illegal cottage industry.  The mortgage industry is tired of being the whipping boy for current housing problem

As a loan originator, even the most simple mortgage transaction turns into the Great Paper Chase.  Every document is checked and rechecked at origination and again at the investor level.  Today a loan file at closing resembles the Manhattan telephone directory.          

The major fraud in this housing crisis is being perpetrated on the American taxpayer. They are paying for the bail outs and modifications.  In the end they will have fewer mortgage options and will be paying more for a residential mortgage

Madness!

The closing scene in the film, The Bridge on the River Kwai,  Major Clipton , the British POW sits on a bluff and watches helplessly as the bridge he had help build is destroyed and several of his comrades killed by his own forces who were sent to help the POW’s .  His frustration is uttered in one comment, “Madness”!

In many ways this is the same comment that many consumers have when they are seeking a residential mortgage.  Today the mortgage process has become winding with little clarity and many good borrowers are getting hurt.  In many ways, the government by trying to fix the past problems has only succeeded in making a mortgage more difficult and expensive to obtain.

The purpose of this Blog is to offer professional mortgage advice to consumers and to answer their questions.  I welcome other professionals in the housing industry to comment as well.

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