How I Handled a Dishonest Mortgage Applicant

Mortgage fraud can be detected in the application process by asking a few extra questions by the loan officer.

This was how the conversation began:

I was referred by a friend, but I don’t remember his name. Not a good sign. I have a preapproval already, but I don’t like the amount of items they want from me. Not a good sign. I am buying a property $100,000 below its real value. Not a good sign. We’re showing the purchase price $20,000 higher and the seller, will be giving me the money back, under the table. Not a good sign. We’re both going to use the same attorney. Not a good sign.

OK, you have offered a lot of information, but I need to ask a few questions. Can I see a copy of your preapproval?

Answer: I gave it to the seller.

What company did the preapproval come from?

Answer: I spoke to this guy online, but don’t remember the name.

What did they ask you for, that you had a concern about?

Answer: They wanted my tax returns.

What information did you give them that they were able to give you a preapproval?

Answer: I told them that I was self-employed and that I brought in $100,000 per year.

Can you share how much net income that you actually paid taxes on in the last couple of years?

Answer: I have a good accountant she makes sure I don’t show any income.

Did the other company ask what you what your net was?

Answer: Why would they do that?

Well, you get the idea. The entire transaction was a sham. I told this individual that no one was going to do the mortgage for him. He told me that he was going back to the online person and hung up.

Check out this article for more information on mortgage fraud:

Mortgage Fraud Rises Due to Dishonest Applicants

By: Krista Franks Brock

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Joe Grieco September 04, 2012 at 03:47 PM
What is really scary is there are mortgage mills out there that still operate in such a manner. Rather than working with a legitimate bank/loan institution that will evaluate an applicant's actual financial status and help determine the amount of debt they can afford, companies like this prey on people who keep trying to buy more house than they can afford, then make more money off selling the debt as part of a bundle to legitimate institutions. Stuff like that is what fed the current housing crisis.
Jim G. September 04, 2012 at 05:18 PM
Yes, the whole industry and process is set up with entities who clip off their percentage as the mark goes past - starting with the RE agent(s), their broker, mortgage brokers, mortgage issuers, title service or attorney, and then loan repackagers. None of that money ever has to be repaid no matter what happens to the mortgage, the property or the mortgage holder. The churn, pushing more and more properties through the loop at higher and higher prices, turned into something you see on a NatGeo special about shark frenzies. The bottom line, though, is that any home buyer could have done the math, used tried-and-true formulas to evaluate their purchasing ability, and stayed away from grossly inflated properties at criminal-assault terms. Could have... or they could listen to the shrieking hype from those who made money from every spin of the wheel, and bought themselves into deep, sometimes lifetime trouble. "You can't cheat an honest man" - and you can't sucker someone who isn't looking for an unreasonable deal or blinded by greed.
ckb September 05, 2012 at 05:40 PM
Was this the conversation that went on between Chris Dodd and countrywide?
Think Positive September 10, 2012 at 06:22 PM
No, it was more likely a 3 way conference call between Secretary of the Treasury Hank Paulson, Countrywide and Bank of America. " It was a message he never expected to deliver. Henry Paulson—free-market thinker, former CEO of Goldman Sachs and Treasury secretary to a conservative Republican president—was unveiling to the world a massive taxpayer bailout of the American financial system". http://www.thedailybeast.com/newsweek/2008/09/19/the-captain-of-the-street.html
Daniella Ruiz September 10, 2012 at 06:35 PM
this reads like a fraud tutorial for earnest cons, thieves and criminals! when the numbers don't appear in writing, the deals off, there's the door, adios amigo!


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