Kelada:General disclaimer
From Kelada
Kelada.com's Policy on Fraud
We do not condone or allow any borrower(s), loan officer(s), seller(s), real estate agent(s), appraiser(s) or anyone else involved in a transaction with us to do business with us or for us to lend to them or their respective party that engages in fraud and/or any fraudulent business practices. We define fraud as the deliberate & willful deception for unlawful gain.
There are several schemes we are on the lookout to avoid and for our customers and business partners to avoid & detect.
Here are some of a few that are popular right now:
1. Air Loans – There is usually no collateral or asset to secure the mortgage or loan to. The property is made up and non-existent. Usually it is collaborated with an appraiser. In other instances a home is parked temporarily and made to look permanent and after the appraisal is completed it is removed and taken away.
2. Builder Bailout – These schemes usually happen at the end of a cycle of housing growth. This entails the use of fabricated and inflated strawbuyers and appraisals to obtain excessive financing on incomplete homes.
3. Backwards Application – Not to be confused with reverse mortgages. This occurs with documentation fraud to fit a specific program or loan criteria to qualify and get an approval or commitment on a loan; for which, on the borrower(s) own merits do(es) not qualify. Typically income or assets are inflated or deflated or manufactured from knowledge of the loan program’s guidelines.
4. Chunking – Unwitting investors are encouraged to obtain a loan or mortgage on inflated and dilapidated properties. Investors later realize that the properties are in a very poor condition and no rents can be obtained; the investors’ equity and investment is depleted. Often characterized by “get rich quick” schemes.
5. Churning – Also called “predatory lending”, entails excessive or unnecessary refinancing without causing any benefit to the borrower(s).
6. Equity Skimming – Assigning title to another individual without any financial benefit to the homeowner and usually without their knowledge. This is outright stealing from disadvantaged borrowers and homeowners.
7. Flip Transactions – These can be legitimate but they have been fraudulent when repairs and renovations are not completed. A flip occurs when a property is bought in poor condition for a low price and sells in a short time with renovations and repairs.
8. Identity Theft – An individual portrays himself or herself as another individual through forged or stolen documents. Consumers and professionals are the victims of identity theft.
9. Identity Fraud – Also called altered identity fraud occurs when an individual creates a new identity or alters their own information to hide or conceal bad credit or information regarding their past.
10.Strawbuyers – Individuals who willingly allow others use of their credit and/or identity to secure financing with no intent to repay. They usually think that others will later be obligated to repay when in fact the third party has no intentions of repayment. This is the most difficult form of fraud to detect and pursue. Professionals in the real estate industry as a whole must be vigilant in detecting this type of fraud early in the process.
Fraudulent lending and fraudulent homeownership in the real estate industry as a whole damages our communities in more ways than one. There is of course the economic impact, but it also affects the health and safety of neighborhoods. Economic impact is heard daily on the media and press, foreclosures and default as a result of fraud cause neighborhood home values to plummet and stagnate. The health impact can be seen through the stress of those who were defrauded and the remaining neighbors in the community who bear the scars of this violation of the law and order and our quality of life suffers as well. Neighborhood safety is also affected by increase in crime and the chemistry of the neighborhood becomes distrustful and fearful.
Revised July 23, 2007. © 2007 Kelada.com. All rights reserved.
