This December marks ten years since the housing market crash.
And now, mortgage fraud is ticking up nationally making some in the housing industry worry we could be heading in the wrong direction.
Keller Williams’ realtor Caralee Gurney has been there before.
She’s showed homes to interested buyers only to be left out in the cold.
“Somebody took me all the way to the night before closing and didn’t end up closing on that property and had lied about everything,” she said. “Lied about their job, lied about where they were living."
Some buyers are so eager to get into a house, at times out of their budget, they are willing to lie.
When comparing the fraud specifically seen among subprime lenders in the years leading up to the crash of 2008 and the kind of fraud they are witnessing now, Gurney said, "the fraud today is more about the buyers being the fraudulent people.”
Eager buyers are sometimes willing to lie about their income or the job in order to qualify for a larger home loan, research has found.
Others will keep their job only until the bank or lender verifies five days before the closing day, as is law in Texas.
“And then they quit the next day,” said Gurney. “Again, not being truthful about having that job and actually being able to qualify for the loan.”
“Yes, it is happening,” said Gayln Ziegler, industry analyst with Opendoor brokerage firm in Dallas.
Ziegler found mortgage fraud is up nationally about 22 percent year over year, mostly in states like New York and California.
But it is occasionally seen in North Texas.
“News like this always makes me a little concerned because this is not something you want to see happen,” she said.
Ziegler notes the fraud that is happening now is nowhere near the fraud seen in the mid to late-2000s.
So who’s committing mortgage fraud? Typically it is buyers who are self-employed or those from out of state who are in a competitive sellers’ market, according to both women.
“If you fall in love with a house and you know there are going to be three or four other buyers that want that house and you might be encouraged to falsify something which you should never do,” said Ziegler.
What’s also concerning, she says, is that the onus is supposed to be on lenders.
“There’s more competition and a lot of those people [lenders] work on commission so they might be a little more eager to push something through that they might not have a couple years ago,” said Ziegler.
Gurney points out that even if lenders do try to verify buyers’ income, there are some scrupulous online companies that will falsely verify incomes.
Both real estate experts advise buyers to work with reputable realtors and lenders and remember there are legal consequences to lying on the legally binding contracts.