As I've mentioned in a couple of different posts ("The State Targets Mortgage Fraud" & "Mortgage Fraud"), loan fraud is a serious problem in the Phoenix real estate market, as well as other markets I would presume. I've experienced first hand on more than one occasion what appeared to be the initial steps of mortgage fraud and have been fortunate enough to have the foresight to advise my clients to not get involved. I have heard of even more stories of these types of things happening on a regular basis in our market. As you can imagine this is not good for our real estate market. Some types of fraud inflate the sales prices of homes to a value that is not justified. Other types of fraud are allowing people to buy homes that shouldn't be buying a home, thus increasing the number of foreclosures.
As warned, the state has begun to take these types of offenses much more seriously and go after those who are involved. I read an article yesterday on AZCentral.com about a mortgage company in Mesa who has been forced to close it's doors and will most likley face legal action due to its lending practices. Hopefully this is just the first of many crooked lenders being forced to close their doors.
Click Here to read this article.