Mortgage Fraud Essay

659 words - 3 pages

Beginning in 2008, mortgage companies had begun to start making loans to individuals as a way to promote home ownership. With the help of Fannie Mae and Freddie Mac, there was increased pressure on these mortgage companies to loan to individuals who did not meet certain requirements that would qualify them. For obvious reasons, these qualifications were in place so that a crisis like this would have never happened. Additionally, the mortgage backed securities and collateralized debt obligations attracted investors due to their high return on investment because of the higher interest rates charged to the mortgagor. When these subprime mortgages had defaulted, both the mortgage/lending and ...view middle of the document...

On the other hand, fraud for profit is a more complex scheme. It involves gross misrepresentation in appraisals and loan documents on multiple loans as a means to gain proceeds from property sales. Both of these schemes have a commonality in that they involve falsifying borrower’s financial information. More specifically schemes like backwards application, fraudulently inflated appraisals, and illegal property flipping are used in the loan origination category.
Backwards Application involves the fabrication of the borrower’s income and assets to meet the minimum loan requirements. This is essentially the most basic form of mortgage fraud since it is relatively easy to inflate income, “create” assets, alter credit reports and modify the prior place of residence.
Fraudulently inflated appraisals are used by mortgagors to generate false equity in the property they own prior to the application. This is done by falsifying an appraisal document or use their own biased appraiser to inflate the value in their property.
Lastly, and most complicated, illegal property flipping revolves around the fraudulent appraisal again. However, this...

Other assignments on Mortgage Fraud

Legal 500 Assignment 1

778 words - 4 pages million in a mortgage fraud deal. “Keith Edwards, a Louisiana resident, had worked for JP Morgan or its predecessors from 2003 to 2008, and had been an assistant vice president supervising a government insuring unit” (Stempel, 2014). Edwards originally sued JPMorgan in 2013 under the False Claims Act, which allows individuals to be able to sue government contractors and suppliers for allegedly defrauding taxpayers. The U.S. Department of Justice

Acc 555 Week 2 Hw Essay

1887 words - 8 pages 2011 financial statement audit would likely be in 2012, more than one year would have transpired. f. Violation of Rule 101 – Only pre-existing mortgages provided by a new audit client that is a bank are permissible. No new mortgage loans are permitted, however. g. No violation – Because Jessica promptly notified her office’s managing partner of the offer and because she was removed from the audit engagement, no violation has occurred

Sears, Roebuck And Co: The Auto Center Scandal

1186 words - 5 pages . It also settled a number of consumer class-action suits. In July 1992, the U.S. Congress held hearings on fraud in the auto repair industry. The long-term impact of the scandal is unclear. Sears has now sold off its securities firm, the Discover card, most of its real estate and mortgage business, and 20 percent of Allstate Insurance. At the end of 1992, auto center sales lagged behind prior levels.46 Also in 1992, Business Week reported that employees in other areas of Sears' business, such as insurance and appliance sales, were feeling the same kinds of pressures from sales quotas.47

Fall Of Aig

3262 words - 14 pages idea that they could he could not see how they could lose anything on these investments. In August 2007, the housing market plummeted and companies, starting with Goldman Sachs, required collateral from AIG that was insuring the mortgage backed securities. By November, AIG’s stock prices had plummeted 25 percent, and AIGFP recognized a loss of $352 million. Even with this, Cassano and Sullivan still tried to convince investors that everything

Executive Compensation

1768 words - 8 pages percent of the provisions are “fraud-based,” triggered if the executive engaged in misconduct causing a restatement. And 39 percent are “performance-based,” a stronger form in which all executives’ incentive payouts are returned if they are based on incorrect financials.41 The adoption of these clawback policies comes as financial restatement rates in the United States plummet. A study from Glass, Lewis & Co. LLC found that in the first

Project On Retail Banking

7281 words - 30 pages have lower operational risk. Operating risk is of two types- * System risk * Fraud risk System risk The risk inherent to the entire market or entire market segment. It is also known as "un-diversifiable risk" or "market risk." Interest rates, recession and wars all represent sources of systematic risk because they affect the entire market and cannot be avoided through diversification. Whereas this type of risk affects a broad range

Testbank

2621 words - 11 pages . Development costs c. Long-term leases d. Revenue Recognition 28. The Sarbanes-Oxley Act (SOX) was not enacted to a. Help prevent fraud and poor financial reporting practices. b. Ensure the act was applied internationally. c. Enable the SEC to increase its policing efforts. d. Introduce new independence rules for auditors 29. Which of the following does not describe a step in the AcSB’s standard

Fatma Reporting

5814 words - 24 pages . The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct. Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or

Verifone And Ncr

5191 words - 21 pages VeriFone Systems, Inc. is a company who was involved in fraudulent financial accounting. After examining their financial statements and other public information prior to the restatement, an analysis was done to determine whether information about the fraud was present. In addition, this paper will have a comparative analysis with a company called NCR Corporation, which is in the same electronic payment industry. A comparative analysis will be

Term Papaer

3314 words - 14 pages entities, such as partnerships in its Thomas and Condor tax shelters, Financial Asset Securitization Investment Trusts (FASITs) in the Apache deal, Real Estate Mortgage Investment Conduits (REMICs) in the steel deal, and REMICs and Real Estate Investment Trusts (REITs) in the Cochise deal. The special purpose entities were used to manipulate the accounting principles. And as a result of one violation Enron’s balance sheet understated its liabilities and

Plans

8374 words - 34 pages ), Florida Statutes, it is a third degree felony to use a false or fictitious name in any application for a driver license or identification card, or to knowingly make a false statement, knowingly conceal a material fact, or otherwise commit a fraud in any such application. Violators face immediate arrest and, upon conviction, penalties up to a maximum fine of $5,000 and imprisonment up to 5 years. The Division of Motorist Services strives

Similar Documents

Mortgage Fraud Essay

1636 words - 7 pages refused to partake in mortgage fraud and her relationship with her coworker soured. Her salary plummeted; her complaints to her senior manager went unresolved and led to a hostile work environment. This environment cumulated with Coleen and five of her female coworkers suing for sexual harassment (Hellriegel &Slocum 250). Around that time these subprime loans started going bad and the lenders were forced to buy back these risky loans

Bernard Madoff Essay

2506 words - 11 pages business life i. Personal habits and likes j. Fund and its reputation k. His ability to make fraud worldwide l. Growth of the fund 3. Mortgage loans m. Growth of ML n. Real estate industry o. How ML were being sold p. Subprime and default credits q. Buildup to the crash r. Stock market crash s. How ML led to the crash t. Market effect 4. Aftermath u. Madoff’s fund v. Madoff’s arrest and discovery 5. Conclusions w. Lesson learned x. Madoff review and downfall

Finance Exam Essay

967 words - 4 pages collateral to guard against default risk; 3. Mortgage-backed securities issued by other savings institutions that were in need of funds; 4. Investment securities like Treasury securities and corporate bonds that provide savings institutions with liquidity; 5. Consumer and commercial loans where consumer loans are typically for home improvements and education 6. Other uses include providing temporary financing to other institutions through

Case Report

1122 words - 5 pages I. Background II. Executive Summary III. Scope IV. Approach V. Findings VI. Summary VII. Impact Background: The fraud examination was conducted after John Spano failed to provide the money that he owed to John Pickett for the purchase of the New York Islanders. John Spano had given John Pickett $80 million of the $165 million deal. The $80 million had been through a loan that John Spano had secured through