What are the Causes of Mortgage Fraud Essay Example | Topics and Well Written Essays - 500 words

What are the Causes of Mortgage Fraud - test ExampleFailure to apply the necessary belowwriting guidelines comes in the form of deliberately refusing to apply the required mortgage agree procedures, which in turn lead to the misrepresentation of facts regarding the ability of the borrower to compensate the mortgage. Therefore, inadequate appraisal of the borrower has highly contributed to mortgage fraud, since if it is non done accurately at the initial stages of evaluation, the risks associated may not be identified, until it is as well late, and the borrower has already started defaulting on the mortgage repayment (USRMR, 10). Thus, the major problem underlying mortgage fraud is not the provision of inaccurate records by the borrower. Instead, the major contributors to mortgage fraud are inadequate quality function application, poor underwriting practices and poor valuation of borrowers assets (USRMR, 4).The regulators and specialists applied lenient measures in the mortgage underwriting standards in the disclose of innovation, seeking to make the process of acquiring mortgage loans easier and convenient for low income households (Liebowitz, 7). However, these innovations declined the mortgage underwriting standards and weakened the control policies. This served the purpose of making mortgage underwriting allow-income all income earners, increasing home ownership and raising the prices of houses (Liebowitz, 15). Therefore, speculators purchased and sold houses under minimal underwriting control, increasing their profits by a greater margin and then running outside from the market when the crisis became eminent. This left the mortgage business with large debts owed by home owners who could not manage to repay the loans, thus causing the acceleration of the mortgage crisis (Liebowitz, 24).