Mortgage Fraud in Kansas City

If there is one thing that everyone needs to be aware of it is mortgage fraud. And the problem has been so prevalent in Kansas City that the FBI stated that we, yes we, were one of the worst cities in America for this kind of felony. If you have been watching the news recently you would have seen that even mayoral candidates and a sitting city councilwoman have been indicted on mortgage fraud counts.

The Kansas City Star http://www.kansascity.com/mld/kansascity/business/16503526.htm has a different story almost daily on different real estate fraud schemes that affect everyone in town through higher mortgage rates, taxes for law enforcement, etc. Fortunately through stories like these the problem is becoming more and more well known and real estate professionals are beginning to take action.

Some of the better known ways to commit mortgage fraud are;

  • misstating income on mortgage application
  • appraisal coming in higher than is realistic (especially with refinances)
  • non-approved and/or non-disclosed seller incentives to aid buyer
  • undisclosed “forgivable” second mortgages
  • inflation of purchase price to allow for “built-in” down payment
  • a mortgage broker turning in to the end lender incomplete files or files with additional documents not available to everyone

Sadly, I could go on and on with different scenarios in which you can commit this crime. There is a perception that no one gets hurt. But with skyrocketing foreclosure rates which can lead to decreasing neighborhood values, I think you will see that it touches everyone.

And excellent blog read from a Michigan real estate agent can be found at http://activerain.com/blogsview/38652/UnMasking-the-Face-of showing how each and every one of us needs to be cognizant to this crime and do what we can to prevent it.

Your comments and opinions on this are welcome. Especially if you have war stories of your own. Maybe some time, with permission, I will share a few of the horror stories my clients have been through.

http://www.listwithchris.net/

3 Comments

Filed under Kansas City Real Estate

3 responses to “Mortgage Fraud in Kansas City

  1. Jesse Barron

    I think that a lot of this should be blamed on stated income mortgages.

    The lenders were lending at breakneck speed and hardly had the time to verify an application.

    If it looks good on paper and a had a decent credit score to match, then it is almost too easy to get a mortgage.

    As for misstating incomes — people do that every day in real life — surely they are going to try doing it in a mortgage application that is unlikely to be scrutinized.

  2. Chris Lengquist

    No question that the buyers were culpable in getting themselves into many a bad situation. Heck, there was even the guy in Leawood who bought several properties in downtown Kansas City without ever having gone and seen them! (Couldn’t take time out of your busy schedule to drive the 14 miles?)The aspect you mentioned is a huge player in the foreclosure dilemma we find ourselves in now.

    But the most heinous frauds that I’m speaking of usually have to do with unsophisticated (or greeedy) buyers working with questionable real estae agents, mortgage borkers and/or appraisers.

  3. Renee Kaplan

    Hello, My name is Renee Kaplan and my website is http://www.reneekaplan.com. Home foreclosures shot up 19.25 percent in May nationwide, however Oklahoma lunged in the opposite direction, with a 14.5 percent drop. In the two numbers is a result of the housing slump in other areas of the country and Tulsa’s relative stability.

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