by Nancy Osborne, COO of ERATE®
(11-20-09) At some point you begin to question whether there are any honest operators left. It was a chain reaction of easy money, greed and dishonesty that led to the mortgage crisis, starting with Wall Street, the credit rating agencies, the banks, the brokers and ultimately the consumers. And yes, looking the other way and failing to perform basic, simple due diligence is dishonest, especially when you are being amply rewarded for doing so. We have created a culture where the incentives for dishonesty are pervasive. Wall Street and the banks have been rewarded with taxpayer funded bailouts and obscene bonuses even though they brought the global economy to its knees and none of the key players appear to be headed to prison any time soon for their egregious risk taking backed by Uncle Sam's ever-ready safety net. Is it any wonder that the consumer has continued along the same path of dishonesty as well? Why not, when it seems to be working so well for bankers and Wall Street titans?
The fraud of understating ones income is running rampant in the new mortgage universe of loan modifications. Throughout the run up leading to the housing bubble, borrowers grossly overstated or exaggerated their income (they lied) in order to qualify for a home that would (supposedly) always go up in value and now that values have plummeted they are doing the exact opposite in order to qualify for a modification of their loan. Loan modification fraud is on the rise as lenders require some type of proof of hardship in order to approve a borrower's request for a reduction in their mortgage payment. As a result borrowers are attempting to conceal assets and they are misrepresenting or outright lying about their income again. In some cases it has been reported that coworkers are being asked by hopeful loan modifiers to lie about their income on employment verification forms as well as their potential for being laid off from their job. Loan modification fraud is being reported even in cases where a borrower is financially able to continue making their full payment but would simply prefer not to. Fraudulent short sales occurring between family members has also been reported in a covert attempt to remain in possession of a property and secure a lower payment along with a sizeable reduction in principal by the lender. Looks like we've come full circle and nothing has really changed except the direction of the economy. What a tragic path we have taken when people are continually rewarded for doing the wrong thing.Express Mortgage
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