Gallagher & Associates Team

Gallagher & Associates Team

Wednesday, September 29, 2010

Mortgage Fraud Stats

Florida is among the nation's leaders in yet another fraud.

A predicate to the crisis of bad loans currently defaulting across the country was mortgage fraud in the application and underwriting of loans.

According to federal commission, Florida played a major role in the number of loans with associated fraud. The Financial Crisis Inquiry Commission opened hearings in Miami that focused on liar's loans, predatory mortgage practices and inflated home appraisals.

They concluded that the financial impact of the fraud was more severe than most have estimated, and prosecuting those responsible will be nearly impossible. It was the third of four hearings being carried out nationwide by the commission, which Congress assembled last year to investigate the causes of the global financial meltdown.

GMAC Halts Foreclosures

GMAC Mortgage directed their attorneys to halt foreclosures on homeowners in 23 states including Florida, Connecticut and New York.

They stated that they may "need to take corrective action in connection with some foreclosures." Brokers were told to stop evictions, cash-for-key transactions and lockouts, regardless of occupant type, with immediate effect, according to an internal company document, addressed to GMAC preferred agents.

The company will also suspend sales of properties on which it has already foreclosed. The letter tells brokers to notify buyers that the company will extend the closing date on all sales by 30 days. Buyers will be able to cancel their agreement to purchase and get their deposit back, according to the letter.

GMAC Mortgage ranked fourth among U.S. home-loan originators in the first six months of this year, with $26 billion of mortgages, according to industry newsletter Inside Mortgage Finance. Wells Fargo & Co. ranked first, with $160 billion, and Citigroup Inc. was fifth, with $25 billion.

GMAC was created in 1919 to provide financing for buyers of General Motors Co.'s vehicles. GMAC converted into a bank holding company in 2008 as it received more than $17 billion of government funds during the financial crisis.