State Targets Mortgage Fraud...

State targets mortgage fraud, from the Arizona Republic, reports that a wave of mortgage fraud in the Valley has prompted state legislation that would define it as a crime punishable by up to 10 years in prison. Cash back deals are a newer form of mortgage fraud whose rapid spread in Arizona has alarmed regulators and real estate industry leaders. The fraud involves obtaining a mortgage for more than a home is worth and pocketing the extra money in cash. The deals inflate home values and can affect values across whole neighborhoods. Ultimately, lenders end up with bad loans. Felicia Rotellini, superintendent of the Arizona Department of Financial Institutions, said her agency was flooded with calls Monday from people reporting cash-back deals and other potential mortgage fraud. Valley appraiser Dennis McMillen said mortgage fraud is an issue in the housing market but that it's not always due to inflated appraisals. In some cases, he said "real estate agents and mortgage brokers are withholding the cash-back agreements from the contract, thus the appraiser and title company does not know of these agreements." Don Matheson of Re/Max Excalibur in Scottsdale said "this is a very big problem and very damaging to our real estate market. We need to catch these people and put them in jail."



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