Mortgage Fraud

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Mortgage fraud has been increasing globally harming homeowners, businesses and the economy. New ways to detect and prevent mortgage fraud have been developed to discover and prevent criminals before the fact; rather than after the damage has been done. The article An Insight into the World of Mortgage Fraud in the US and UK by Beverly Houlbrook talks about mortgage fraud and how it is becoming more evident “as economies enter recessionary periods and house prices tumbles” (34). It states how the global mortgage markets are providing “more opportunities for professional, innovative fraudsters to exploit and profit from loopholes and system weaknesses” (34).

Houlbrook goes on to discuss the different types of mortgage fraud ranging from soft fraud to professional mortgage fraud. Fraud for housing (a soft fraud) is when an applicant is acting alone to acquire property. In terms of volume it is the most common type of mortgage fraud based on income and employment misrepresentation on their mortgage application. Fraud for profit (a professional mortgage fraud) is when numerous borrower identities, lending institutions, “fictitious properties and overvalued professionals are involved” (34). The losses created by fraud from profit may be substantial and could lead to national and international headlines. It can also support the lifestyles of criminals by “hiding money laundering activities, arms dealing and drug trafficking” (34). Two types of fraud that is common in the US and UK is identity or house theft and occupancy fraud (buy-to-let (BLT) mortgages). House theft occurs when property is bought or financed “without the knowledge of the property owner” (35). Occupancy fraud occurs when “BLT landlords attempt to disguise buy-to-l...

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...ue to increased repossessions and fewer first time home buyers, putting the landlord in a strong position” (42).

As more economies enter recession and housing prices decline; mortgage fraud in the US and UK has been increasing causing harm to innocent homeowners, businesses and the economy. In attempt to combat mortgage fraud controls have been put into place to prevent the damage before it being done. Since mortgage fraud has increased substantially homeowners and businesses need to find a way to protect and detect when a deal is just too good for comfort. The most important way to protect yourself or business from mortgage fraud is through education learn the facts about the investment down to the smallest nuances.

Works Cited

Houlbrook, B. (2011). An Insight into the World of Mortgage Fraud in the US and UK. Housing Finance International , 25 (3), 34-42.

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