You’ve probably read ad nauseam of the great opportunities in the real estate market these days. What with interest rates so low and prices low, too, how could anybody go wrong?
Fine, but try taking advantage of it. I’m buying property in the Rocky Mountains and it’s several times harder than when I’ve bought property in the past. The requested paperwork is overwhelming, and everything needs to be proved two or three different ways. Checking in with investor and business friends, I’ve found that they’re facing the same barriers. A successful entrepreneur I know in Boulder, Colorado, for example, recently refinanced the home where he’s lived for 23 years without a single missed or late payment, and he needed to provide twice the documentation he needed to provide for the first note on the place.
So, if you’re trying to take advantage of the current environment, be sure your paperwork is in order and you have several layers of proof behind every income source.
On top of that, beware of fraud. Last week, LexisNexis issued a 28-page report on America’s still-growing rate of mortgage fraud, from which the following:
There are various reasons for the increase [in instances of mortgage fraud], including new opportunities to take advantage of consumers, maintenance of lifestyles obtained during the boom period, consumers who are desperate for the American dream of homeownership, and the need for new, creative methods of moving illicit funds.
How is fraud still being facilitated? Technology has provided fraudsters with the ability to access information, conduct criminal activities and remain anonymous via the internet, and manipulate processes that rely on the need for expediency. Although technology is an enabler of fraud perpetration, for the scammer there must be a system to beat and/or a victim to manipulate. Fraudsters are opportunistic and often prey upon the vulnerable within society. Systems and processes that can be beaten are the easiest targets and are often selected. For example, 2009 saw record foreclosures in several major metropolitan areas, a trend which led to the emergence of several different types of foreclosure rescue scams. In these scenarios, vulnerable homeowners in danger of losing their houses are being taken advantage of by fraudsters ahead of the fraud curve. They know that it will take time for the industry to catch up. This slow-moving reactive lag time is what must change.
In 2009 and beyond, the industry-at-large has been forced to succumb to constant change in what is considered acceptable business practices. . . .
Unfortunately (and rather unbelievably), there are some lenders who continue to rely upon stated information and borrower sourced documentation. The standard for lending due diligence must be elevated. The current distractions facing lenders with regard to loss mitigation and righting past wrongs is ripening the opportunities for and complexities of fraud in other areas. Lenders are more aware of the adverse activities that contributed to the current state of the industry. Unfortunately, fraudsters are also paying attention and evolving their practices to be more complex and difficult to detect. New frauds emerge daily — the industry must react in real time.
