"Cash Back" Mortgage Fraudsters Target Home Sellers In Weak Markets
Home sellers having a rough time in finding a buyer for their home are targets of unscrupulous loan originators for "cash back" scams, according to an article in New York House, reported at UpstateHouse.com.
The article speculates that mortgage lenders who originate these loans are co-perpetrators in the fraud, and because they don't hold the loans (the loans are sold to wholesale lenders, and then to the ultimate holders, who are likely to be investors in mortgage-backed securities), they don't take the risk of default and foreclosure.
While loan originators who sell loans in the secondary market can be required to repurchase loans that go into default within a certain time period after the loan closes, the article posits "[t]he ringleader protects the [originating] lender against buybacks by selecting borrowers who can carry the payment with the help of [a] supplement [a cash set-aside derived from the fraudulently obtained funds]. So long as the supplement lasts, which will be one to two years, the likelihood of default is low."
The expectation apparently is that by the time the cash set-aside is depleted, the loan originator's "buy back" period for the fraudulently procured loan will have expired.
To read more, see:
$750K mortgage fraud too sweet to pass up
(Sellers without any purchase offers are most likely to participate)
written by Jack Guttentag.
(revised 9:12 am)
.
The article speculates that mortgage lenders who originate these loans are co-perpetrators in the fraud, and because they don't hold the loans (the loans are sold to wholesale lenders, and then to the ultimate holders, who are likely to be investors in mortgage-backed securities), they don't take the risk of default and foreclosure.
While loan originators who sell loans in the secondary market can be required to repurchase loans that go into default within a certain time period after the loan closes, the article posits "[t]he ringleader protects the [originating] lender against buybacks by selecting borrowers who can carry the payment with the help of [a] supplement [a cash set-aside derived from the fraudulently obtained funds]. So long as the supplement lasts, which will be one to two years, the likelihood of default is low."
The expectation apparently is that by the time the cash set-aside is depleted, the loan originator's "buy back" period for the fraudulently procured loan will have expired.
To read more, see:
$750K mortgage fraud too sweet to pass up
(Sellers without any purchase offers are most likely to participate)
written by Jack Guttentag.
(revised 9:12 am)
.
posted by Home Equity Theft Reporter at 6:10 AM
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