Friday, August 29, 2008

NJ Mortgage Fraud Prevention

Mortgage fraud is costly. Aside from the financial harm, there can be the hardship of housing and credit losses to the individuals involved. There is also the differing categories about what exactly constitutes mortgage fraud. But like all crimes a big part is prevention in the first place. Today that topic is addressed in an article titled Mortgage Fraud rates are up from The Philadelphia Inquirer. The article addresses both New Jersey and Pennsylvania, but lets focus on the NJ aspect of the article -

A study released this week by the Mortgage Asset Research Institute Inc., of Reston, Va., showed that areas already affected by high rates of foreclosure were experiencing increased fraud levels.

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Pennsylvania and New Jersey did not appear on the institute's list for the quarter, nor were they among the top 10 states in the Mortgage Asset Research Institute's Fraud Index rankings for fiscal 2007.

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New Jersey law requires the brokerage to be licensed and at least one individual in the company to pass a similar test.

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Pennsylvania and New Jersey also fared well in a report released yesterday by the Consumer Federation of America, which said the two states were among eight and the District of Columbia that have laws protecting consumers against abusive lending practices for all small-dollar loan products.

In both states, the $250, two-week payday loan and the $300, one-month auto-title loan are prohibited, while interest rates are capped on the $500, six-month loan and the $1,000, one-year loan.

As from the article both states seem very active in prevention of mortgage fraud that can be done from mortgage brokers. It is nice to see that the pro-active measures also prevent limits on interest rates.

Strict compliance on who can become a mortgage broker and/or loan originator are important in protecting consumers while also being an impediment to fraud. In an upcoming post we will examine several different states mortgage broker requirements to understand why some states became hot spots for criminal activity.

1 comment:

the bruiser said...

Only one person in the entire brokerage needs to be licensed? Would you hire a plumbing firm or electrical firm if the worker on-site was not licensed? How about if the driver of an 18-wheeler didn't have a CDL but the executive VP of Logistics did? And folks wonder why we have a complete trainwreck.