Bad storm rising: Florida No. 1 in mortgage fraud

A tumultuous year of record foreclosures is rooted, at least partially, in the rise in mortgage fraud. When housing prices were climbing toward their zenith, it opened the doors for criminals to obtain mortgages illegally in myriad ways. One consultant estimates the national annual losses between $4 billion and $6 billion.
Florida has the nation’s worst problem, according to the Federal Bureau of Investigation. Fort Myers, where the housing downturn is among the worst in the Sunshine State, ranks No. 8 nationwide among cities plagued by misrepresentation to lenders. Recently in Polk County, two men pleaded guilty to illegally receiving $34 million by completing almost 300 fraudulent mortgage applications over two years.
Rapidly rising home prices were one factor that led to the spike in mortgage schemes, leading to a 176 percent jump in mortgage fraud investigations over the past five years by the FBI, which has nearly 40 task forces or working groups focused on the problem.
Lenders have tightened lending requirements over the past year, which may help curb fake applications. However, as the number of vacant homes increase and represent bargain purchases, the atmosphere remains charged for potential fraud. A classic signal: the promise of an outrageous profit in a short amount of time. Be aware of those who present unsolicited contracts and use high-pressure sales tactics.
Consumers — both buyers and sellers — can protect themselves through an old adage: If something sounds too good to be true, it probably is.
Consulting a real estate attorney can help protect against potential fraud. The attorney can review documents and provide solid legal counsel. Buyers and sellers alike never should sign blank documents.
Other tips for avoiding mortgage fraud:
•Review the title: See how often the property has been sold. If it has changed hands a number of times in a short period of time, the “flipping” may have artificially inflated the value. Your real estate attorney can assist with this review.
•Examine proposed mortgage: Understand your terms. Ensure your personal information is listed correctly. Do not accept on faith. If in doubt, review with a real estate professional.
•Guard against identity theft: Alarm bells should sound if someone asks to use your name, Social Security number or other identifying feature on an application. If someone offers to pay you to use the information, that’s a sure sign of a scam. Deal directly with the mortgage broker or lender, not a third-party.
Charles J. Kovaleski is president of Attorneys’ Title Insurance Fund, Inc., (The Fund) the leading title insurer in Florida and the sixth largest title insurance company in the country. The Fund has been in business for more than 50 years and supports a network of more than 6,000 attorney agents statewide who practice real estate law. The Fund, based in Orlando, underwrites more than 300,000 title insurance policies for owners and lenders in Florida every year.  For more information, visit www.FundHomeInfo.com.