Fraud alert: Bogus mortgage applications are on the rise

Borrowers use scam websites to help "verify" inflated incomes

TRD NATIONAL /
Oct.October 06, 2018 01:00 PM

Mortgage fraud risk jumped more than 12 percent year over year at the end of Q2. (Credit: iStock)

Mortgage fraud is on the rise as more buyers are inflating their incomes in order to qualify for new purchases.

Roughly one in every 109 mortgage applications has some indication of fraud, according to data from CoreLogic cited by CNBC.

Mortgage fraud risk climbed 12 percent in the second quarter from a year earlier. And areas like New York, New Jersey, Florida, Washington, D.C. and New Mexico are most at risk.

Bridget Berg, principal of fraud solutions strategy for CoreLogic, said rising home prices and strong demand has put pressure on bona fide borrowers to qualify for a mortgage.

“Undisclosed real estate liabilities, credit repair, questionable down payment sources and income falsification are the most likely misrepresentations,” she said.

The biggest cause for fraud risk was inaccurate income reporting. The practice shot up 22 percent year over year, and it’s now easier than ever for fraudsters. Borrowers can use online services that will create fake pay stubs and answer phone calls to “confirm” income.

“Sites will have a disclaimer, claiming it’s for novelty purposes or similar qualifying statements,” Berg said. “Some are out of the country and not traceable. There are sites where you can buy credit lines to increase your credit.”

CoreLogic’s survey also found that loans coming from wholesale lenders or brokers have a higher risk of fraud, which was common during the last housing boom. [CNBC] –Rich Bockmann


Related Articles

arrow_forward_ios
Home sale price declines are expected for July, after a recent bump, according to a CoreLogic report. (iStock)

Home sale prices got a bump, but a drop is coming: Report

Home sale prices got a bump, but a drop is coming: Report
(Images courtesy of Victor Group)

The Getty condo chops prices up to 53%

The Getty condo chops prices up to 53%
442 Union Street and 257 Berry Street (Google Maps)

Brooklyn’s luxury market reaches new pandemic high

Brooklyn’s luxury market reaches new pandemic high
Marwan Kheireddine (inset), Jennifer Lawrence and 400 East 67th Street (Getty, Compass, BDL Accelerate)

Jennifer Lawrence’s Upper East Side PH sold at 37% loss

Jennifer Lawrence’s Upper East Side PH sold at 37% loss
Senate Minority Leader Chuck Schumer and Senate Majority Leader Mitch McConnell (Schumer by Tasos Katopodis/Getty Images; McConnell by Ting Shen/Xinhua via Getty)

Schumer v. McConnell on SALT: Who’s gonna give?

Schumer v. McConnell on SALT: Who’s gonna give?
111 Leroy Street and 817 Fifth Avenue (StreetEasy, Google Maps)

Luxury deals plummet in Manhattan — again

Luxury deals plummet in Manhattan — again
From left: Jared Kushner, 715 Park Avenue, Deutsche Bank CEO Christian Sewing, and Rosemary Vrablic (Credits: Kushner by BRENDAN SMIALOWSKI/AFP via Getty Images; 715 Park via Google Maps; Sewing by by Thomas Lohnes/Getty Images; Vrablic by PAUL LAURIE/Patrick McMullan via Getty Images)

Apartment sale to banker for Trump and Kushner probed

Apartment sale to banker for Trump and Kushner probed
Renderings of 17 Jane Street and Edward J. Minskoff (Renderings via Kristen Krajewski; Minksoff by Patrick McMullan/Patrick McMullan via Getty Images)

Minskoff sells first condo in West Village project for $22M

Minskoff sells first condo in West Village project for $22M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...