Some of the ways mortgage fraud has been perpetrated;
- Over-stating income on a loan to get the borrower to qualify for a higher than qualified loan amount or to increase the Yield Spread Premium he could collect.
- Pressuring or working in collusion with an appraiser to inflate the value of the property to qualify for the loan, a better rate or to take out more cash.
- Fluffing fees to the maximum allowed and/or spreading out larger fees on the Good Faith Estimate to hide how much he’s really charging.
- Mislead or misrepresent the loan program or rate they are getting hoping they will just sign to higher fees and rates at closing when they have limited if any options.
Usury is generally used to describe excessive interest but it really an old term to describe the fee above he loan amount to repay a loan…
If you agree with it, it’s interest, if you don’t, it’s usury…
Usury is one of those words that is being thrown around alot by people who suspect they were victims of mortgage fraud. Usury in many mortgage fraud cases is alleged but very rarely proven because it can’t be proved by the homeowner.
As a fraud investigator, what I have been seeing alot of is forgery, sloppy underwriting, sloppy work by the broker, docs that don’t match which would nullify the mortgage and the terms of the note, broker not re-disclosing changes in fees and rates, fraudulent appraisals, Brokers and Lenders not properly disclosing terms and fees. We also see a lot of things going on from the securitization side as well. Many lenders who are foreclosing do not have the legal standing to do so because the mortgage and the note have not been properly conveyed to them. It boils down to Real Estate 101. If you don't own it, you can’t enforce it.