Fraud Grows, Despite More Consumer Protection

Real estate fraud continues to grow, despite aggressive responses from federal regulators.

The Federal Bureau of Investigations has reported that incidents of mortgage fraud have tripled over the last two years to 21,994, with the value of the crimes quadrupling to $1.01 billion.

The crimes range from individuals lying on their applications to complex rings of identity thefts, straw buyers and appraisal fraud.

Harvard Law School professor Howell E. Jackson, who authored a study of mortgage brokers and yield spread premiums, blames the anonymity of the mortgage business. Thirty years ago, applicants went down to their local bank and dealt with a loan officer who they probably knew. Today, the business has grown and changed and most buyers never talk to a lender. Instead, they rely on a broker to get them the best deal.

Jackson estimated that brokers will earn an estimated $33 billion in commissions this year.

“People should ask their broker how much they’re making, including both yield spread premiums and direct fees, and if it’s over $2,000 they should question why,” says Jackson. “No one says the broker has to make a certain amount. It’s negotiable.”

Source: Los Angeles Times, David Streitfeld

Author: niaknowles

Real Estate Broker, Christian Yogi, Mother of three

2 thoughts on “Fraud Grows, Despite More Consumer Protection”

  1. It seems that whenever times are difficult crime increases. Real estate isn’t immune. Even though they are making 33B collectively some are going out of business and are desperate. Now is the time to use an agent to buy or sell more than ever to safeguard against fraud.

  2. Banks will earn 50 times that amount with originating loans and there are more home being foreclosed on that was originated by banks than Brokers and no one is talking about that. Banks employ 10 times more mortgage sales people than brokers. When times get bad someone has to take the blame.

    And where was the State banking departments when all this was going on? Where was the voices when the Realtors were bidding up the sales prices for over 10 years? They were making buyers bid against themselves in order to get the home of their dream $30,000 over price??? I have 3 days of where were all you people when this great country was being raped? To late to start blame now! unless you have all the facts.

    Lastly, YSP is on every product sold in the country. When you buy a pack of gum, the owner paid 14cent and you pay 75cent (that’s YSP), when you buy a car the dealer paid $12,000 and you pay $24,000 (that’s YSP) that’s america and there is nothing wrong with it unless you don’t understand business.
    thank you for the time on this.

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