From the years 2002 to 2005, Georgia has been consistent on the top among mortgage and real estate fraud cases in the United States documented by The Prieston Group. The Prieston Group is a fraud protection and prevention group. The types of fraud operations preying on Georgia real estate investors include false rent verifications, occupancy fraud,appraisal fraud,investment schemes, broker fraud, and identity theft. Because of this, the state now upholds the Georgia Residential Mortgage Fraud Act which names misstating, omitting, and misrepresenting facts and intentions in real estate deals as criminal acts. The Georgia Residential Mortgage Fraud Act continues to boom the real estate industry of state.

Source: http://www.buzzle.com/editorials/6-19-2006-99686.asp
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COMMON REAL PROPERTY FRAUDS:

Home Equity/Identity Fraud – A forged deed is recorded to give the appearance that the perpetrator has
acquired ownership of a property. The perpetrator uses the equity in the property as collateral to borrow
money. No payments are made on the new loan(s), and the true owner could face foreclosure.

Home Renovation/Mortgage Fraud – Contractors offer to do home improvement work or lenders offer
special “low-interest” financing, but do not deliver what was promised. Homeowners are left with partially
complete or substandard construction, or a mortgage payment that is higher than expected.

Real Estate Investment/Foreclosure Fraud – Investors are lured into buying property that is supposedly
facing foreclosure for pennies on the dollar. Quitclaim deeds and other documents are forged to give the
appearance that a property is being sold to avoid foreclosure.

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This occurs when someone buys a property in bad shape for a cheap price. Say $50,000. They make some cosmetic repairs spending say $1,000 and then sell it at an inflated price say $80,000 to a buyer who puts little or no money down.

The seller takes a mortgage back for a large amount, say $78,000, and gets a phony appraisal based on the inflated sales price.

You are then offered the mortgage at a discount at what looks like an attractive yield.

Soon afterwards the buyer stops making payments and moves out. Leaving you with a trashed house.

The key to this fraud is the inflated appraisal. Remember that appraising is an art not an exact science. Nonetheless an appraisal should be within 10% of the true value of the property.

This fraud can be hard to spot. Many legitimate investors DO buy properties for much less than their true value and are able to genuinely sell them for a higher price.

• The key is to check out the comparable properties on the appraisal form and satisfy yourself that they are truly comparable.
• Try to specify the appraiser and not use one provided by the investor.
• Check the credit rating of the new borrower. Especially if they have only put down a small down payment.
• Be wary of mortgages for sale that have not been aged, that is, a number of payments made on them.

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There are 2 type of mortgage fraud.

• Fraud to get a property
• Fraud to make a profit

The first is were someone lies about facts to get a loan to buy a property.
The second is where someone lies about facts to make a profit.

Fraud is committed by falsifications in the following ways:

1. Loan application fraud. Where an applicant lies about their income or their job. Perhaps the down payment they are making was given to them by the person selling them the home and the value of the home inflated to cover it.
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Real Estate Fraud is occurring much more frequently now than ever before. It is very important as real estate professionals that do business the ethical way that this stops. Below are a few tips to protect yourself if you feel uncomfortable in a transaction.

Document the Situation: Prepare an Amendment to Contract to be signed by all parties.

Disclose Information: Disclose all changes to the funding lender and obtain their written approval.

Verify the HUD-1: Verify that the HUD-1 Settlement Statement accurately reflects the transaction and any rebates, allowances, discounts, etc.

Report: If you suspect fraud report it!

Withdraw: Before you become involved in illegal activity you can withdraw from representation.

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Washington Attorney General Rob McKenna announced that much of his 2008 legislative agenda has survived the 2008 Legislative session.

Mortgage foreclosure fraud:

House Bill 2791, sponsored by Sen. Pat Lantz, D-Gig Harbor, helps reduce foreclosure rescue schemes, including those with an option to allow the original homeowner to buy or lease back the property. The bill has passed the Senate, 39-6.

Identity theft:

Bills giving ID theft victims more tools in the fight to clear their names are now one step closer to the Governor’s signature.
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Identity theft continues to wreak havoc on the economy and hardworking honest people who can simply do without it with all the problems we are facing today. Even an innocent looking e-mail can be used for phishing and include the information for financial stuff and you get vishing scams. All of the above mentioned activities designed to get your information for use in criminal activity that you would surely hate.
As stressed over and over again, under any circumstance, should you provide information to people you cannot be sure of their credentials. When using the internet, be sure you are on a legitimate page with the proper security in place such as an intrusion prevention system (internet security software), (more…)

The federal government has released information saying that cases of fraud that have been reported to various law enforcement offices shows an increase of 26 percent. This alarms them for as the government prepares to release the bailout money that is part of the $700 billion bailout funds, their aim is to get the money to those who need it and out of the hands of these crooks. They have mobilized information campaigns on all forms of media from large print (posters and billboards), newspaper and even paid for movie-time showing of ads that aims to make people aware of such activities in hopes of steering them away from fraud. People are also given the numbers to call just in case they do get into such scams who promise to give them cash till their bailout funds come enough to make their mortgage payments.
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Nowadays, many people are fooled easily by the great promises that some real estates agents say. Here are some tips to avoid real estate fraud:

Always, always, always understand what you are signing and agreeing to, and, always seek assistance from a skilled real estate attorney. If you do not understand something you’re being asked to sign, ask for clarification and re- read the document again before signing.
Ask for and check referrals and references for real estate industry professionals. Check the licenses of the real estate professionals with state, county, or city regulatory agencies. Make sure that the people you’re dealing with are in good standing with the appropriate regulatory bodies.

Be suspicious of such low investment. If it sounds too good to be true, it probably is.
Be wary of strangers and unsolicited contracts, as well as high- pressure sales techniques and people who play to your emotions.

Extreme caution against this kind of people should be greatly measured.

A Ponzi scheme usually offers abnormally high short-term returns in order to entice new investors. The high returns that a Ponzi scheme advertises (and pays) require an ever-increasing flow of money from investors in order to keep the scheme going.

The system is doomed to collapse because there are little or no underlying earnings from the money received by the promoter. However, the scheme is often interrupted by legal authorities before it collapses, because a Ponzi scheme is suspected and/or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases.

The scheme is named after Charles Ponzi, who became notorious for using the technique after emigrating from Italy to the United States in 1903. Ponzi was not the first to invent such a scheme, but his operation took in so much money that it was the first to become known throughout the United States. Today’s schemes are often considerably more sophisticated than Ponzi’s, although the underlying formula is quite similar and the principle behind every Ponzi scheme is to exploit lapses in judgment arising from investor naïveté.