Back Office Mortgage Fraud on Rise

The unethical behavior of mortgage broker and real estate agent collusion is illegal, though many homeowners have been put at risk of foreclosure due to the practice. The new way of making this scam work is that a pre-approved buyer uses a real estate agent that shows them properties beyond the range they were approved for. When the borrower is made aware of the situation, a broker is “suggested” by the agent, promising that the broker can make the deal go through. Often times, the broker uses adjustable rate mortgages to make the monthly payments affordable to the borrower and the deal is sealed.

Though this may seem ideal for all involved, the borrower ends up paying more when the “adjustable” part of their mortgage goes into effect, resulting in higher monthly payments that the borrower may not be able to afford. The end result is a happy agent, a happy broker, and a borrower looking at foreclosure. New programs are being offered that educate homebuyers about the risk involved with packages offered by an agent and broker together. Though the practice is illegal, it falls on the borrower to know that the deal will be worse for them in the long run.