According to mortgage-fraud researchers, income misrepresentations on home-loan applications were up 22.1 percent in the second quarter of this year compared with the same period in 2017.
Ominously, most of it is not traceable to criminals trying to bilk lenders out of tens or hundreds of thousands of dollars through traditional loan swindles.
Rather, it’s increasingly what researchers call “bona fide” borrowers who don’t have the income to qualify but are determined to get a home mortgage, even if they have to mislead the lender.
How’s this happening?
Researchers say many applicants can go online and find sites that will help them create customized pay and employment records, sometimes even confirmable by a phone call by the loan officer to an “employer” that doesn’t exist.
Or they borrow thousands of dollars for their down payment but swear to the lender that it’s an interest-free present from a cousin or a brother, documented with a genuine-looking gift letter using a form obtainable online.
It’s all part of one of the least-reported issues in the real estate market of 2018: Home-purchase mortgage frauds are on the rise and are posing cat-and-mouse challenges to major players, including banks and big investors such as Fannie Mae.
● Fannie Mae recently warned lenders via several alerts about a loan-fraud technique in which applicants claim to work for specific companies and provide income and employment information that appears to be bulletproof but turns out to be totally bogus.
“Some fake employer setups are well-organized and provide pay stubs, phone verifications” and even fake diplomas.
“Some of these services are openly advertised on the internet” and feature multiple levels of services and fees.