Housing fraud on the rise

Ken Harney, a nationally syndicated real estate columnist, writes in the Daily Herald:

Could today’s seductive conditions in the housing market — severely marked-down prices, record low interest rates and hundreds of thousands of foreclosures waiting to be resold — be breeding new generations of the very practices that led to the crash?

In an ironic twist, there are signs that the wreckage left over from the housing bust may be reigniting dubious real estate schemes and fraud.

One study found that loan “applicants’ dishonesty about their employment and income was up 9 percent from the same period the year before and a stunning 50 percent from the third quarter of 2009. The reason: Borrowers increasingly are falsifying W-2s and other records in order to meet the tougher debt-to-income thresholds lenders adopted following the bust and recession.”

Read the whole article at the Daily Herald.

This is nothing new. I’ve heard real estate agents and mortgage brokers counsel buyers to lie about one thing or another for as long as I’ve been around the business. When confronted with the fact that the behavior would be criminal the individuals typically respond that “everyone’s doing it” or “there’s zero risk of getting caught.”

Everyone’s not doing it, and most real estate agents would never advise committing fraud. If you encounter an agent or a mortgage broker who does, protect yourself by getting out of the relationship immediately. An agent or broker who counsels you to lie and commit a crime will not hesitate to lie to you.

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