As if struggling homeowners don’t have enough to worry about: the Federal Bureau of Investigation (FBI) is reporting that mortgage fraud is on the rise. In a report released last week, the FBI says that consumer complaints are now coming in at a record pace, underscoring the seriousness of the problem.

The FBI reports receiving 46,717 Suspicious Activity Reports related to mortgage fraud in 2007compared to 35,617 in 2006 and just 6,936 in 2003. Although just 7% of the reports cited an exact dollar loss, the total reported losses for 2007 was $813 million. The FBI says that their case load for mortgage fraud increased 47% in 2007 over 2006.

Citing the continued housing slump as one of the reasons for increased fraud, the FBI says that the current market is “…further incentive for shady real estate industry insiders to look for dishonest ways to turn a profit and growing opportunities for scam artists to prey on vulnerable homeowners.”

The FBI has identified the top 10 hotspots nationwide for mortgage fraud in 2007, which were carefully mapped from multiple public and private sources: Florida, Georgia, Michigan, California, Illinois, Ohio, Texas, New York, Colorado, and Minnesota. The north-central region of the US had the largest share of mortgage fraud, followed by the west and southeast regions.

Among the current mortgage scams the FBI has cited the following:

• Builder-bailout” schemes where developers unload excess inventory through financial trickery.

• Foreclosure rescue frauds that trick homeowners into signing over the deed to their house.

• Seller-assistance scams that use false appraisals to sell homes.

• Identity theft that leads to home equity credit lines being opened and drained.

Visit the FBI’s site to obtain your copy of their 2007 Mortgage Fraud Report.

Resources

Mortgage Lending Guides

Smart Money Tips

Tags: consumer protection, FBI, mortgage finance, mortgage fraud, refinance home

All those dire predictions for the housing market has plenty of consumers scared. Some people have refused to buy a house during this economy, waiting until things improve before wading back in. Others are seeing an opportunity to buy now and are reaping the benefits of that decision.

When it comes to predicting housing trends, much of the advice being offered isn’t always accurate. In fact, if you read some of the reports you’ll quickly notice a few problems regarding home values including:

Predictions are too generalized – Sure, foreclosures are way up in some areas but that doesn’t mean that every market reacts the same way. If there is an oversupply of homes, then prices will continue to drop while foreclosed homes in a tight housing market are likely to be snapped up quickly.

Local markets are too broad – Even within a metropolitan area, selling trends can vary considerably. One municipality could be struggling while another could be thriving — local conditions including schools, jobs, and amenities will often determine just how strong a housing market is. Even within a single municipality, one development could be very attractive while another one not so.

The types of housing vary in price — Condos could be losing value while houses could be stable or even rise in price in certain markets. A market’s average home value decline could be weighted because one type of housing is dropping in price, skewing numbers for that ranch or colonial considerably.

Forecasts are too long range — predicting the future is difficult even with a thorough trend analysis at your disposal. Variables including government intervention, supply & demand, and local job markets can change a market’s course almost overnight.

Although a housing predictor can offer some information of value, they aren’t perfect. You’d do better tracking local trends yourself and drawing your own conclusions based on your personal analysis.

Tags: house values, housing market, market predictor, real estate

If you recently lost your home to foreclosure, how long do you think it’ll take before you can become a homeowner again? 5 years? 7 years? Maybe even 10 years?

Many consumers believe that once they have lost a home to foreclosure, they won’t have the opportunity to purchase another home for many years. Thinking that their credit is trashed and that a foreclosure will be on their credit report for 7 or 10 years, perhaps longer, some people are under the impression that homeownership is off limits.

True, a foreclosure will be on your credit record for beyond the seven year period that most bankruptcies are listed. Yet, having a history of a foreclosure doesn’t have to stop you from buying another home. Moreover, you could find yourself in another home a few months post foreclosure.

Most conventional lenders will not consider lending you money for a home quickly, for the simple reason that if you lost a home recently, then you could lose your home again. But there are factors which might be taken into consideration by the lender:

• You lost the home due to divorce, an illness, loss of job, or some other valid reason.

• You have the cash on hand to put at least 20% down on the home you want to purchase.

• You are willing to pay a higher interest rate, perhaps as much as 2% over the current rate offered to their best borrowers. Along with the bigger down payment and possibly including some points, a lender may decide that you are a risk worth taking.

Loans and loan rates are always determined based on risk factors. If a lender believes that you are worth the risk and you can put down a large amount of cash, then you could be considered for a loan.

Granted, you’ll pay tens of thousands of dollars more interest payments with a higher risk loan, but you can always refinance later especially as your credit improves and a lower rate is offered to you.

Home ownership post foreclosure isn’t a given, but it isn’t impossible either. You must demonstrate to a lender that you are worth the risk and hope that they can see past the problems which caused you to lose your home in the first place.

Resources

Bank Home Equity Program

Credit Management Center

Home Equity Calculators

Tags: foreclosure, home buy, home loan, Money Management