There are people who believe that mortgage fraud is a thing of the past and that bad guys have either fled to other domains, or that they have been caught. However, recent events show us that mortgage fraud is pretty much alive and well, and that there are many willing to go to great lengths just to earn some easy money. On the other hand, there are also individuals looking to secure a low rate on a loan and stretch the truth in order to obtain it.
The Amerisave scam
The current top spot is taken by Amerisave Mortgage Corp. The Consumer Financial Protection Bureau has just issued an order where Amerisave will have to pay 19 million dollars due to perpetrating a deceptive scam of bait-and-switch.
The Atlanta-based online company which lends in all 50 states has been showing misleading interest rates to would-be borrowers. That was just the beginning, as once interested borrowers visited their site, Amerisave would lock the rates and then charge hefty up-front fees. The company also failed to honor the interest rates that were published while also overcharging borrowers illegally for services provided by affiliate third-party companies.
The scam worked like this: Amerisave would post misleading rates in third-party sites, and borrowers that were interested would be redirected to Amerisave’s website. Here, would-be borrowers would be presented with quotes based on a 800 FICO score even though they did enter a much lower score on the third party site. The scam resulted in borrowers falling for misleading quotes. Amerisave would then charge customers at closing for “appraisal validation” while hiding the fact that this service would be provided by an affiliated third party. The fee associated with this validation could also be marked by as much as 900 percent.
The Consumer Financial Protection Bureau has charged Amerisave with 19 million dollars as well as its owner, Patrick Markert with 1.5 million dollars, money he will have to pay personally.
The Ocwen Financial Corp scam
Another mortgage fraud was set up by the Ocwen Financial Corp. The CFPB have called on Ocwen for running a complex scheme in which they took as much as 65 million dollars in fees each year from homeowners for providing forced-placed insurance. This coverage was actually bought by affiliated companies at the expense of the distressed homeowner. While there have been no charges filed yet, the company was asked to explain what it was doing since the Federal Housing Finance Agency has clearly banned all mortgage services and banks from accepting any sort of commissions issued by affiliate parties on force placed policies.
Mortgage fraud is still alive
The two cases above go to show that mortgage fraud hasn’t disappeared, as it is alive and kicking. There are many bad guys trying to squeeze distressed homeowners for money, and at the same time, there are also borrowers who try to obtain better rates through occupancy fraud, distorted income statements and even falsification of stolen social security numbers. So keep your eyes peeled, regardless if you’re a borrower or a lender.