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Financial Loan Fraud
According to the FBI, Corporate fraud contributed to some of the financial woes through the manipulation of financial statements and accounting fraud. U.S. regulators and law enforcement officials are trying to get more power to prevent predatory lending. Congress is reviewing what resources need to be in place to pursue those who contributed to the economic crisis and how to prevent any future abuse.
There is concern that some rules need to be made since there did not seem to be any rules in place to prosecute lenders who were part of bad mortgage loans. Regulators would like more control over the mortgage origination process. With the growth of the subprime mortgage market the last few years, homeowners are now suffering because of unfair practices and loans they can’t manage.  | Free Financial Newsletter with No Obligation Credit Card and Loan Offers - Subscribe Join our free credit offers membership. We often acquire special credit offers for people of all credit types. Take advantage of these financial offers with no obligation to apply or accept. You may cancel membership instantly at any time, and we will not add you to any other mailing lists. |
There are investigations into the subprime lenders and the possibility of insider trading. Subprime lending involves financial institutions lending to borrowers who do not meet prime underwriting guidelines and the borrower may not be able to pay back money. A subprime loan could be considered as a loan where the person getting the loan has a FICO score below 640 and can involve credit cards, auto loans, and mortgage loans.
Rhode Island has been reported as the nation’s top fraud hot spot for mortgage fraud concerning inflated appraisals. With the recession, there has been more mortgage fraud reported as lenders, brokers, and borrowers may have manipulated information. This could be due to the tighter standards to qualify for home loans and with the even tighter credit crunch. Home loans were down by one third in 2008 than the year before.
Some fraud or scams offer to rescue a stressed borrower and trick them into releasing their mortgage deed. Some states have tough penalties for such scams, yet only a few state attorneys are able to seek criminal charges and jail time. Mortgage Bankers are learning how mortgage fraud is committed and are learning how to identify it. The FBI has a Washington-based mortgage fraud team which a long list of fraud investigations. Often mortgage scammers target the elderly and convince them to sign their mortgage deed over to them.
There have been reports of scam phone calls or ads where a loan is guaranteed to those with poor credit. Consumers are told to call a toll free number and give credit information or to complete paperwork. To get the loan they must mail or wire money to pay for processing fees or some type of charge. Of course the consumer is not going to get a loan and looses their money. They may also risk identity theft if they give social security numbers or other personal information to the scam artist.
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