LIAR LOANS
A category of mortgages known as low-documentation or no-documentation mortgages that have been abused to the point where the loans are sometimes referred to as liar loans. On certain low-documentation loan programs, such as stated income/stated asset (SISA) loans, income and assets are simply stated on the loan application. On other loan programs, such as no income/no asset (NINA) loans, no income and assets are given on the loan application form. These loan programs open the door for unethical behavior by unscrupulous borrowers and lenders.
These loan programs are designed for borrowers who have a hard time producing income and asset verifying documents, such as prior tax returns, or who have untraditional sources of income, such as tips, or a personal business. These loans are called liar loans because the SISA or NINA features open the door for abuse when borrowers or their mortgage brokers or loan officers overstate income and/or assets in order to qualify the borrower for a larger mortgage.
Low-documentation mortgages usually fall into the Alt-A category of mortgage lending. Alt-A lending depends heavily on a borrower's credit score (FICO score) and the mortgage's loan-to-value ratio (LTV) as tools to determine the borrower's ability to repay the mortgage.
Trustee - A third party appointed to represent the investors’ interests in a
securitization. The trustee ensures that the securitization operates as set forth
in the securitization documents, which may include determinations about the
servicer’s compliance with established servicing criteria.
A lot of people are in dire financial straights because they got sucked into what is now being called the mortgage crisis.
Now that the problem is being examined carefully, a lot of fraud is being blamed as being a contributing factor to the entire mess. The problem is that the fraud aspect of the mortgage crisis is hardly over. Mortgage scams designed to take advantage of people in financial trouble are flooding the Internet and even the classified section of local newspapers.
Mortgage fraudsters for the most part don’t have a conscience and could care less if they steal from your grandparents, neighbors or you!
The FBI, who has put more than a few of these people behind bars in recent history is using the intelligence gathered in their investigations to reach out to the public on how to avoid becoming conned with promises of a new beginning, or rescue from their current dilemna.
“And while some of these steps may require you to do a little extra work now in the long run it may save you aggravation, money, and even your house,” according to Special Agent Scott Broshears, a mortgage fraud supervisor with the FBI.
The first recommendation is to get referrals and then check out the licenses of real estate and mortgage professionals with government (state and local) regulatory agencies.
They also recommend that you do your own research on what homes have been sold for in your area. Checking out tax assessments is one way to do this.
Beware of too good to be true mortgage deals, especially using a no money down gimmick.
Never let anyone talk you into making a false statement on a mortgage application. This is how a lot of people ended up with mortgages they couldn’t afford in the first place.
Don’t sign a blank document or a document with blank lines. Something could be added later. Read everything thoroughly and if you don’t understand everything completely get legal assistance.
Don’t get conned into paying an upfront fee to get out of mortgage trouble. Be especially wary if these solicitations come from e-mail or web advertisements. You will likely be out the up-front fee and in the same boat as before you paid for the assistance.
In more sophisticated upfront (advance) fee schemes involving foreclosure fraud, victims are even talked into signing over their property. The victim loses the upfront fee, their house and still owes their mortgage when this occurs. Advance fee fraud has been around for centuries and is merely a false promise of something that is too good to be true in return for an advanced payment.
On a final note, the FBI recommends that if you are facing foreclosure, the best thing to do is to see if your lender will work for you.
Agent Broshears and the men and women working with him have seen their case-load with mortgage fraud triple in the recent past. By sharing these tips, learned from real life investigations, they hope to make their job easier and see a few less people victimized by this growing phenomenon.
If you need more information on mortgage fraud, the FBI has a page on their site dedicated to this subject.
