Mortgage Fraud Increases as Lending Standards Tighten
According to the latest report from the Mortgage Asset Research Institute, California trailed right behind Florida when it came to mortgage fraud. As mortgage lenders tighten up qualifications, many individuals have resorted to fraudulent acts and other methods to get by. Compared to last year, the number of mortgage fraud related incidents has increased by about 42 percent according to the report.  The most common cases of fraud involved the misrepresentation of the borrower’s name, income, employment history, and assets.

A Few Tips to Help You Avoid Mortgage Fraud

• - Be wary of lenders or mortgage brokers who promise results which sound too good to be true. These individuals could either be over promising you results to simply draw in your business, or may resort to fraudulent methods to deliver on these promises.
• - Ask your mortgage lender what the qualifications are needed for the specific loan scenario; compare these requirements to your loan application and see if they match up.
• - Don’t get talked into committing mortgage fraud. Don’t let your mortgage broker convince you it’s OK-more importantly, don’t let yourself convince you it’s OK.

Late Payments and Delinquencies Rise Throughout the Nation
According to the Transunion credit reporting agency, the amount of individuals late on their mortgage by at least 60 days shot up considerably in this third quarter compared to last year. Meanwhile, the statistics for California showed a 5.8 percent delinquency rate-the third highest in the nation (Florida and Nevada hold the top two spots respectively).

California Home to Some of Biggest Price Declines in Nation
Here is an excerpt of the top 10 areas with the steepest price declines (4 out of 10 spots belong to California):

#1)  Oakland-Fremont-Hayward, CA -29.07%
#2)  Riverside-San Bernardino-Ontario, CA -28.56%
#3)  Los Angeles-Long Beach-Glendale, CA -28.46% 
#7)  San Diego-Carlsbad-San Marcos, CA -24.90%
The full list can be seen here.

Although California is home to some of the largest price declines, we can’t forget that it also held some of the most inflated “bubble” prices seen in years. In the same manner, the delinquencies that we’re seeing are the combination of loose lending and anxious buyers who couldn’t really afford a home in the first place. As for the mortgage fraud, mortgage lenders and banks have tightened up their guidelines so much that individuals are more desperate than ever-but still certainly no excuse.

I know it must seem like all bad news, but something to consider is that all of this was expected in one way or another. On a positive note, the shift we’ve taken towards tighter lending guidelines may make it harder to refinance or purchase a home, but in the end, it will preserve homeownership to those who can actually afford it. As for the steep price declines in California, it’s unfortunate for current homeowners who have borrowed within their means, but it’s been a necessary move if we expect to return back to the realistic home prices of before.

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