Times Are Tough, Its Time To Think Outside The Box
When times get tough, the tough think outside of the box. Ten years ago mortgage borrowers trying to manipulate the system made their debts appear smaller and pumped up incomes to qualify for loans that they otherwise wouldn't get. Now it looks like borrowers have found a new way to get lower payments from lenders on loan modifications by doing just the reverse.
More and more borrowers have been understating income and overstating debts to seem more distressed. Authorities believe that as many as one out of every five mortgages contains material inaccuracies; many of which are geared towards making borrowers seem less affluent than they are.
Firms that browse through statements for false information say that there are so many made up W-2 statements and fake phone numbers to verify employment and pay that they will find an employer's direct number instead. Borrowers trying to play the lenders will give them their own phone number or a friend's number and say that it is their employer. Lenders are not going to take this sitting down of course; looking at bank statements and recent tax filings are two ways to catch these people in the act.
Borrowers may exaggerate the amount of credit card debt they owe as well. Even as lenders pull credit reports to verify the debt, people are running up their credit card balances on purpose before halting payment on mortgages that they can in fact afford. A third type of fraud happens when borrowers say they live in a property they actually rent out.
To add to the mess, loan modification and foreclosure-rescue specialists coach borrowers to do this or modify the information without their consent. Despite the fact that there are many legitimate providers, many game the system as a way to rationalize charging for a service that is free. Authorities are currently looking into loan-modification specialists who directly defraud consumers.
More and more borrowers have been understating income and overstating debts to seem more distressed. Authorities believe that as many as one out of every five mortgages contains material inaccuracies; many of which are geared towards making borrowers seem less affluent than they are.
Firms that browse through statements for false information say that there are so many made up W-2 statements and fake phone numbers to verify employment and pay that they will find an employer's direct number instead. Borrowers trying to play the lenders will give them their own phone number or a friend's number and say that it is their employer. Lenders are not going to take this sitting down of course; looking at bank statements and recent tax filings are two ways to catch these people in the act.
Borrowers may exaggerate the amount of credit card debt they owe as well. Even as lenders pull credit reports to verify the debt, people are running up their credit card balances on purpose before halting payment on mortgages that they can in fact afford. A third type of fraud happens when borrowers say they live in a property they actually rent out.
To add to the mess, loan modification and foreclosure-rescue specialists coach borrowers to do this or modify the information without their consent. Despite the fact that there are many legitimate providers, many game the system as a way to rationalize charging for a service that is free. Authorities are currently looking into loan-modification specialists who directly defraud consumers.
About the Author:
Mallory Megan works for a debt collection company. Also she composes articles on business, finance, consumer spending and collection agencies.
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