It seems as if there is always some bank, corporation or millionaire out there trying to take advantage of those less fortunate. In fact, this was a huge factor in the housing bubble that contributed to the economic recession that began in 2008. Unfortunately, certain predatory lending practices, such as mortgage fraud, have continuously been on the rise over the past few years. Many Arizonians wonder whether they’re also affected by this rise, and sadly, they may not like the answer.
What is Mortgage Fraud?
Mortgage fraud is a way for dishonest individuals to get high profit margins on a home through illegal loan application methods. There are various ways to do this, but they often involve the middle man in a mortgage loan transaction either misleading the borrower or the lender. This allows them to receive a larger payoff for a mortgage, and since a home’s value may not actually amount to the worth of the loan, the homeowner and lender can both become victims. DG Tucson AZ based, a real estate law firm, stated in July that “New and old mortgage scams all prey on homeowners’ fears and on their understandable desire to make sure they can stay in their homes.”
Mortgage fraud is a continuously growing problem in the United States. This is so much the case that the Federal Government infused around $236 million into several agencies, including the Department of Justice, in 2009 to fight occurrences of this crime. Of course, certain states may have different experiences than the country as a whole, but it doesn’t seem as if Arizona is one of them.
Mortgage Fraud Incidence in Arizona
The Mortgage Asset Research Institute has been coming out with a mortgage fraud index (MFI) for quite a few years, and it’s the gold standard when it comes to researching mortgage fraud in various states. The index indicates the prevalence of fraud related to mortgages and misrepresentation. Unfortunately, Arizona rose from the 24th worst state for completed mortgage frauds in 2006, all the way to number three in 2010.
The Mortgage Asset Research Institute has a specific way to assign numeric scores to each state when it comes to judging how bad of a mortgage fraud problem the state has; this is the aforementioned MFI. Arizona’s MFI in 2006 was 57. Amazingly, this number jumped up to 227 by 2010. This may seem like just a bunch of statistics, but it has a very real effect on Arizona’s housing market.
Mortgage Fraud Effects for Arizona
There are various ways that mortgage fraud affects Arizonians and their housing markets. One form of mortgage fraud occurs when the seller of a home gets a fraudulent appraisal and then sells the home for an inflated amount. Sadly, this immediately affects all of the neighbors around that home. The inflated price of this newly sold home will cause property taxes in an area to rise, so simply living nearby can cause an individual money.
In addition, if a homeowner has to default on their loan, the bank, in the case of mortgage fraud, is often stuck with a home that’s valued nowhere near what they’re owed on it. This can lead to a home going unoccupied, and high vacancy rates can make an area look bad and even invite crime and squatters.
Those who become victims of fraudulent mortgage practices will do well to find an experienced real estate attorney in the local area of the property in question since they may be able to recover the losses they incurred due to fraudulent mortgage practices. A local attorney will be up to date on all the latest local and state laws in regards to the fraudulent activities on properties, and be equipped to legally help.
Unfortunately, mortgage fraud is definitely on the rise in Arizona. Sadly, this means that borrowers with the best of intentions will still be conned by dishonest individuals who are simply trying to make a buck. Fortunately, it’s not necessary for an individual to take this laying down. As mentioned, real estate attorneys can do wonders for a person who’s facing difficulties due to illegal mortgage practices, and because of the harsh consequences related to being scammed in this way, going it alone is definitely not a good option.
Legal researcher Lisa Coleman shares how the housing market and mortgage fraud have recently affected the state of Arizona. She recently found online from DG Tucson, the AZ real estate law group, an article discussing mortgage fraud and some interesting facts about the increases due to the many foreclosures in today’s housing market.