How Americans forge income and employment certificates to buy houses

Prices are rising, interest rates are rising—and it's becoming increasingly difficult for many in the U.S. to plan to buy a home. The most resourceful and desperate are taking a bold step: more and more Americans are falsifying certificates of work and income.

Фото: Depositphotos

According to research, the percentage of misrepresentation of income in applications for mortgage loans increased by 22,1% in the second quarter of this year compared to the same period in 2017, notes Miami Herald. The depressing fact is that most of those who forge certificates are not criminals who are trying to squeeze tidy sums out of creditors. These are what are called “bona fide borrowers.” They do not have income that needs to be officially shown, but these people intend to get a mortgage loan.

How does this happen? The Internet makes it easy. Modern applicants find Internet projects that help them create salary and employment certificates, sometimes even confirmed by a phone call from a loan officer to a pseudo-employer, which does not exist.

Sometimes they lend thousands of dollars for a down payment, but swear to the lender that it is a selfless gift from a cousin or brother, confirming the “authenticity” of the gift with a form also found on the Internet.

It's all part of one of the least publicized problems in the 2018 real estate market: Mortgage fraud is evolving and forcing a cat-and-mouse game among major players, including banks and large investors like Fannie Mae.

Overview of the situation:

• Overall fraud in mortgage applications jumped 12,4% from last year, according to analytics firm CoreLogic, which has access to a national database of loan applications and issues periodic reports on the issue. Falsifying income is the fastest growing form of fraud, but many people fake their “employment” as well. And some tell lenders that they plan to live in the home they are buying but instead rent it out, dramatically increasing the risk of default and loss of funds for the unsuspecting lender.
• Fannie Mae, the largest U.S. mortgage agency, recently warned lenders about a new scam in which applicants claim to work for companies by providing income and employment information that appears to be as secure as armor but turns out to be completely fictitious. Applicants often claim to have been students immediately before taking their current job, making it difficult for lenders to obtain tax records from the Internal Revenue Service for those “student” years. Applicants may also declare salaries that appear too high for their age or experience. Fannie Mae reports scams in California, but CoreLogic says the schemes are now spreading nationwide.

“A typical scenario is a new job with a significant salary increase or a high-paying first job out of college,” CoreLogic said in its fraud report. -Some fake “employers” are well-organized and provide pay stubs, phone checks, and even fake diplomas. Some of these services are openly advertised online and have multiple tiers of services and fees.”

Фото: Depositphotos

Bridget Berg, CoreLogic's senior director of fraud solutions, reports that the increase in scams by homebuyers is partly "a function of what's happening in the real estate market" - a large number of potential buyers are spooked by rising prices, frustrated that they don't able to afford what they want, and are motivated to achieve it through less legal means.

Berg noted that while the risk of fraud as measured by her company's research is growing and alarming, it still represents a small share of total loans originated—just under 1 percent.

According to George Souto, a loan officer from William Raveis Mortgage in Middletown, Connecticut, although he didn’t see so many statements containing frank fraud, as an expert he regularly faces situations where applicants make overly generous assessments of their income. This is not to deceive the lender, but because the income they claim to the Internal Revenue Service is actually lower than their real income before taxes on expenses.

Other lenders say too many borrowers don't scrutinize the true details of mortgage application data. Joseph Metzler of Mortgages Unlimited in St. Paul, Minn., says, "They just feel like it's worth filing or not doing so to improve their chances of getting a loan."

It is important to understand that all this is much more serious than just numbers. It is a type of bank fraud associated with severe potential sanctions, including fines and imprisonment.

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