Greed, ignorance, and good intentions are the various starting points for mortgage fraud. Whether a person is looking for a home to live in that's nicer than he can legitimately afford, or he's looking to flip a property to make a quick buck, mortgage fraud entails lying or hiding information from the bank to get more favorable loan terms.
There are two main types of mortgage fraud: "fraud for profit" and "fraud for house." While "fraud for profit" schemes are fairly clear-cut in their dubiousness, "fraud for house" is often committed by people who aren't aware of the seriousness of their actions. Some truly don't think of what they're doing as wrong.
"Fraud for house" is committed when a person falsifies her income or credit information in order to qualify for a home loan that she knows she couldn't qualify for based on her true financial circumstances.
Oftentimes this type of fraud seems innocent?after all who'll get hurt if I fudge the numbers just a little bit? However, as we've seen with the record number of foreclosures happening in recent years, too many people have gotten themselves involved with real estate deals that they simply couldn't afford.
A single foreclosure can reduce the property values for everyone on the street, which can lead to entire neighbourhoods with slumping real estate values. Thus, one little lie on an application can have serious consequences: for the bank who never recoups their money, for the homeowners who lose their homes, and for the rest of the economy that takes a hit right alongside the real estate market.
"Fraud for house" cases commonly involve a buyer exaggerating their income on the application form, or in some cases, by getting financial aid from the seller without notifying the lender. This type of loan is known as a "silent second," where the seller offers to help the buyer come up with the down payment, while keeping the bank in the dark. This is problematic because the bank gets a false picture of the buyer's financial resources. The bank then authorizes a loan based on inaccurate information, and risks not ever getting their money back.
Another popular form of mortgage fraud involves what's known as a "straw buyer" or a "nominee loan." In this type of fraud, a buyer uses someone else's credit and income information on their loan application. He may decide to pay a person to use their information, or he might steal somebody's identity to get their data.
The person whose financial information is being used is known as the "straw buyer." She is simply the buyer on paper, and has no intention of ever living in the home or of making the mortgage payments.
For the bank, this situation is very risky. There is a person that they don't know that's living in the home. They could have very low income or a poor credit history, which means that the bank's chance of getting their payments is very slim. Fortunately, if the bank doesn't receive its monthly payments, it's within their rights to go after the straw buyer for remuneration.
Lenders check borrowers' financial information for a reason. They want to make sure that you get a home that you can actually afford. Buying beyond your means can result in a financial disaster for you, and major losses for the bank. While you may have your eye on an upscale property, if it's beyond your means, it's beyond your means. Lying to the bank to get the financing you need is illegal and unethical, no matter how sincere your intentions were.
A mortgage amortization is a lending instrument taken out that is employed in conjunction with a desired time period. It may be a 25 or 30 year loan payback time which amortizes over a 30 year period and the longer the period then the slower such a loan will amortize. With a longer mortgage amortization you will as a result be paying smaller regular payments, but it also means that you will pay higher interest on the loan over the period that you are repaying it.
A typical loan payment will involve two unique components. One of which is the interest payments and the other being the portion which will be used to pay off the actual principal (main part) of the loan.
So a off the shelf amortization mortgage is a one where a constant payment is submitted on a 30 year fixed mortgage term each month over a period of 360 months. But there are also loan amortizations which can work in backwards. Such agreements which are commonly advertised with a minimum payment standard such as "1%" can allow a borrower the option to pay less than an interest only payment. Another type is the interest only amount which keeps a mortgage the exact same balance as it is not being paid off as every amount of money that you pay for such a loan is used to reduce the principal. If you pay less than the interest only amount then you will find yourself increasing the balance of your loan rather than decreasing it. Such increases in the balance are known as "negative amortization".
So if you need to calculate what your mortgage amortization is going to be then use a mortgage amortization calculator and it will display just how much the balance will be month by month. It will show you exactly much interest you will remit over the years and how much of your balance has been paid off at any given time during the loan repayment period. The only requirement is for you to fill in your information on a loan amortization calculator which relates to your loan and then click the calculate button. Below this will a box which will display the amounts with regard to repayment of both the interest and principal of a loan.
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