Mortgage Fraud

We have all felt the effects of the financial crisis that our nation is facing, and it is important we understand the causes of this crisis.  The term “mortgage fraud” is a generic term used to describe certain strategies utilized by individuals to achieve approval of mortgage loans utilizing fraudulent information.  Unfortunately, few realize that this conduct constitutes a crime punishable by  fines and/or prison.

The most common method is to provide false income information when reporting income and/or the debts of the applicants to the lender.  Exaggerating the applicant’s income or hiding his/her debts could result in the applicant qualifying for a mortgage loan for an amount in excess of his/her true capacity to repay.  Eventually, the mortgage debtor stops paying which results in the filing of a foreclosure action by the lender.  Due to the significant volume of properties being taken by the mortgage banks, the market values of the existing properties  are falling considerably.  Thus, it is not economically feasible to develop additional residential projects, which has had a devastating effect on the construction industry because if there is no development, there is no construction.  Similarly, those individuals or professionals that work in the construction industry have suffered significant reduction in their income.

The level of unemployment continues to rise, and those that purchased investment properties backed by fraudulent mortgages have suffered significant losses, and in some cases, have lost their retirement funds.  No one wants to assume blame for the crisis, and the politicians are trying to wash their hands like Pontius Pilate to avoid losing votes.  The undeniable reality is that there is enough blame to go around.  Even though we must insist that the perpetrators of the fraud be held accountable, we must give priority to identifying the causes of the crisis, take preventive measures, and search for solutions.

I believe that the crisis is the product of an epidemic of irresponsible greed.  The brokers ignored industry regulations to earn commissions, and the appraisers inflated  properties values to ensure that  brokers would continue to utilize their services.  The mortgage bankers ignored the lack of reliable documentation to justify the loans, and the national banks flooded the secondary market with defective mortgages.  Finally, certain consumers allowed themselves to be convinced that they could afford to purchase properties clearly beyond their means. 

The majority of the so-called experts believe that the economic crisis will last at least one year.  It is not the first time that this country has been faced with such a crisis, and it will not be the last.  Historically, the challenge of difficult times tends to unite us in the common goal to achieve recovery.  The employers must be appreciative of their employees efforts, and employees should protect  their employer’s interest.    We must be more disciplined in the use of our natural resources and we must adjust our spending habits to the current economic reality.  Simply stated, we must collectively pursue solutions under the belief that with patience, sacrifice, and discipline, we shall prevail.

Luis A. González
Attorney and Mediator
L. A. González Law Offices, P.A

(407) 649 - 8389