North Carolina Regulators Focusing Their Fight On Mortgage Fraud

Officials with the North Carolina Banking Commission are looking to changes in their battle on mortgage fraud to stem the serious foreclosure problem currently existing in the state, according to an article in The News & Observer, at newsobserver.com.

The Commission:

• has proposed rules to improve lending practices for nontraditional mortgages such as interest-only loans and option-payment ARMs,
• has hired three more investigators, and
• is realigning its investigations and examination of lenders and brokers to focus on lenders with high rates of foreclosure.

A concern of the Commission is that, because originating mortgage lenders get paid up front and often sell the loan to another lender, the original lender may be less inclined to make sure the customer will be able to pay the loan over the long haul.

One regulator seems to suggest that, through the use of "Wite-Out or cut-and-paste documents", it has become too easy for originating lenders to "pad a home buyer's bank account", "[change] a potential home buyers' annual income", and otherwise "falsify loan applications". "[Letting] family members with good credit sign for a relative's home" is also a concern.

For more, see Lenders may face new rules.

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