According to a quarterly report from the Mortgage Asset Research Institute, California is still having quite a tough time dealing with mortgage fraud. MARI reports that California is right behind Florida, which ranks number one in reported fraud activity.

In the SFGate, MARIs vice president Merle Sharick comments that “Mortgage fraud used to a a crime of opportunity - now it’s a crime of necessity…” Accustomed to the housing boom, these individuals are obviously having trouble dealing with this tough market. As a result, the culmination of greed and need to support these lifestyles has put the pressure on these folks; unfortunately resulting in rampant loan fraud activity.

In California, the statistics show that much of the fraud lies within income and employment misrepresentation, false asset or bank statements, and an overall general misrepresentation of the applicant’s information.

Keep a Sharp Eye

• Research your mortgage agent. If you suspect something fishy going on, chances are that there might be a pattern you could uncover. Contact the BBB, references, past clients, and others professionals in the community.
• Read what you sign. I know there’s enough paperwork to deal with, but this gives crooks the opportunity to pass one by you. Make sure you verify the numbers and any personal information on your loan application. In general, it is good practice to also keep a copy of everything you sign.
• Get a second, third, and fourth opinion. Find someone you can trust who is not involved in the transaction, and can give you a true unbiased opinion. Ask a friend, relative, or an attorney to look through the documents with you. They might just catch something you overlooked.

Keep it Clean

• Times are tough, but things could be worse. California median home prices may be dropping but they are still certainly high compared to national standards. But don’t use this as a reason to excuse any type of fraudulent activity. Misrepresenting your income is one of the most common types of fraud. Legally, it’s fraud. Financially, it’s irresponsible.
• Don’t be fooled. If your agent is helping you commit mortgage fraud, you might feel safe that you have an insider in the lending industry. Think again. If this so called professional is helping you commit fraud, what makes you think they can be trusted in the first place. If they are willing to defraud the government and bank institutions, they will have no problem taking advantage of you.

If you were interested in reading the full MARI report, the Orange County Register has provided a link to the PDF file online. Remember, as Sharick pointed out, crime has become a necessity for certain individuals during this tough time. As a consumer, the best preventive measure you can take is to stay informed and do your research throughout the home loan process.

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