WEST PALM BEACH, Fla. – James and Maria Ivory's dreams of a relaxing retirement on Florida's Gulf Coast were put on hold when they discovered their new home had been built with Chinese drywall that emits sulfuric fumes and corrodes pipes. It got worse when they asked their insurer for help — and not only was their claim denied, but they've been told their entire policy won't be renewed.
Thousands of homeowners nationwide who bought new houses constructed from the defective building materials are finding their hopes dashed, their lives in limbo. And experts warn that cases like the Ivorys', in which insurers drop policies or send notices of non-renewal based on the presence of the Chinese drywall, will become rampant as insurance companies process the hundreds of claims currently in the pipeline.
At least three insurers have already canceled or refused to renew policies after homeowners sought their help replacing the bad wallboard. Because mortgage companies require homeowners to insure their properties, they are then at risk of foreclosure, yet no law prevents the cancellations.
"This is like the small wave that's out on the horizon that's going to continue to grow and grow until it becomes a tsunami," said Florida attorney David Durkee, who represents hundreds of homeowners who are suing builders, suppliers and manufacturers over the drywall. "This is going to become critical mass very shortly."
During the height of the U.S. housing boom, with building materials in short supply, American construction companies imported millions of pounds of Chinese-made drywall because it was abundant and cheap. An Associated Press analysis of shipping records found that more than 500 million pounds of Chinese gypsum board was imported between 2004 and 2008 — enough to have built tens of thousands of homes. They are heavily concentrated in the Southeast, especially Florida.
The defective materials have since been found by state and federal agencies to emit "volatile sulfur compounds," and contain traces of strontium sulfide, which can produce a rotten-egg odor, along with organic compounds not found in American-made drywall. Homeowners complain the fumes are corroding copper pipes, destroying TVs and air conditioners, and blackening jewelry and silverware. Some believe the wallboard is also making them ill.
The federal government is studying the problem and considering some sort of relief for homeowners.
Meanwhile, the AP interviewed several homeowners who, like the Ivorys, were unlucky enough to purchase properties built with Chinese drywall, and are now being hit with a second and third wave of bad news: Their insurers are declining to fill their claims, then canceling the policy or issuing notices that policies won't be renewed until the problem is fixed. The homeowners have little recourse since neither the Chinese manufacturers nor the Chinese government are likely to respond to any lawsuits or reimburse them for the defective drywall.
In each instance, the insurer learned of the drywall through a claim filed by the homeowner seeking financial help with its removal.
The Ivorys have sued, but it could take months for their case and hundreds like it to work their way through the courts. In the meantime, they have moved back to Colorado because their three-bedroom ranch home two miles from the Gulf of Mexico is unlivable and soon will be uninsured.
"It's been an emotional roller-coaster," said James Ivory, who is still making mortgage payments on the house. "It was all in our heads, nice weather down there, calm life, beaches. Now I don't know what to do."
John Kuczwanski, a spokesman for the Ivorys' insurer, Citizens Property Insurance Corp., said their claim was denied because the drywall is considered a builder defect, which is not covered under the policy. It also considers the drywall a pre-existing condition that could lead to future damage, which is why the company won't renew the policy unless the problem is fixed.
"If someone were to have bought a new car and there was a defective part, would that person go to their auto insurance to get that fixed or would they go back to the manufacturer?" Kuczwanski said. "We provide insurance, not warranty service."
Citizens, a last-resort insurer backed by the state of Florida for people who can't find affordable coverage elsewhere, has received 23 claims about Chinese drywall, and has so far denied five. Citizens could not immediately say how many policies had been canceled or not renewed because of the drywall.
Robert Hartwig, president of the Insurance Information Institute, agreed that homeowners policies were never meant to cover "faulty, inadequate or defective" workmanship, construction or materials.
Tom Zutell, spokesman for the Florida Office of Insurance Regulation, said the cancellations are troubling, but legal. No law prevents insurance companies from canceling policies because of Chinese drywall.
"We are staying out of the fray at the moment," he said.
Even if a homeowner does not file a claim over the drywall and remains covered, they could later be denied a claim for a fire or another calamity if insurance investigators determine the home contained undisclosed Chinese drywall.
"If you think that by not telling your insurance company about the drywall that you're protected, you're sadly mistaken," Durkee said.
A newly married couple in Hallandale Beach, Fla., saved up for five years to buy their first home only to later discover it had Chinese drywall. They filed a claim with their insurer, Universal Insurance Co. of North America, and were denied.
Universal then sent the couple a letter, stating their policy was being dropped because "the dwelling was built with Chinese drywall."
The couple then signed on with Citizens, but didn't divulge the drywall issue, and hasn't filed another claim. The 31-year-old man requested anonymity because he's afraid of losing his insurance policy, and thus his home.
"I honestly don't know what I'd do if that happened," he said. "All this has basically taken us back five years. We saved money to buy this home."
Universal did not respond to requests for comment.
Louisiana lawyer Daniel Becnel Jr., who represents more than 200 owners of homes containing Chinese drywall, is advising his clients to avoid filing claims with their insurers or they could lose their houses.
"I really believe everybody should have an insurance claim with this," Becnel said. "But it's hard to tell somebody to go make a claim, then they lose their policy ... This is a nightmare for people."
"I tell people flat out if you file, you may lose your insurance," agreed Mississippi attorney Steve Mullins, who has about 100 clients with Chinese drywall in their homes.
One of Mullins' clients, Chris Whitfield, a 29-year-old tire repairman in Picayune, Miss., says he moved out of his house because the drywall was making his family sick. His claim was then denied by his insurer, Nationwide, which followed up with notice that he would be dropped because his policy didn't cover unoccupied dwellings.
Nationwide spokeswoman Liz Christopher declined to comment on Whitfield's case and could not say how many drywall claims had been submitted or how many policies had been canceled or not renewed.
Whitfield offered to move back into the house, but he said he was told he'd first have to replace the drywall.
"I don't know what I'm going to do," he said.
___
Associated Press Writer Damian Grass in Miami contributed to this report.
By Marilyn Lewis of MSN Real Estate
http://realestate.msn.com/article.aspx?cp-documentid=19423888
Why do consumers prefer Toyotas or Hondas vs. Chevy's, Fords or other American cars? It would seem that most cars provide basically the same features, but year after year Toyota and Honda continue to provide reliability and value beyond that of their competitors in the eyes of buyers.
While American car manufacturers have closed the gap, the public's perception has been fashioned by years of import performance that wasn't matched by American cars. Check any of the automobile rating agencies and at the top will be a long line of “imports” with high marks for quality, performance and reliability.
The appraisal profession is faced with a similar "perception problem".
From the client’s perspective, how reliable are real estate appraisals? Are they better off by letting an AMC (Appraisal Management Company) “handle the hassle” or could they be getting something better and more reliable?
What can be done to change the market's perception of the services the professional appraiser provides? When you consider that the consumer is making perhaps the largest investment of their life with the purchase of a home, logically, they should want assurance that it is a sound investment, something a good appraisal would provide.
We all know that the purchase of a home is an emotional decision and that tends to over-shadow logic. Still, you would think that with the median price of a home in the $200,000 plus range, a $300-$400 investment by the consumer would be a cheap insurance policy and in their best interest prior to taking the housing plunge.
The reality is, consumers don’t know what we do, nor do they know what we could do for them as a consulting type assignment when they are about to make the investment of their lives. Likewise, appraisers often don’t comprehend the needs of their clients nor consider additional services they could provide “collectively” that would be valuable to the client.
The lender is making a large financial commitment, taking on the risk of underwriting the collateral with someone’s best guess (as professional as it may be) at what that property could be sold for in less than “perfect market conditions”. Even with a solid borrower profile, the lender is guaranteeing the value to the secondary market in the form of a “buy-back” commitment.
What could appraisers do to change the process, the rules and the appraisal report that would have the most positive impact on the perception of the appraisal by the client, the agent, the consumer and the secondary market? How can we reinvent the profession, to not only make it more attractive to the client, but more valuable to the underwriting process and therefore a must have?
Appraisers think they know what the client wants, "quick turn times and low fees”, however, are they really the key elements from the client's perspective or are there other factors (if provided on a consistent basis) that would shift the market's perception of the services appraisers provide?
What's missing in the equation is the appraiser's comprehension of the client's needs. Toyota, Honda and other foreign automakers capitalized on this concept by changing the public's perception of the quality of the product.
When first introduced to America, Toyota, Honda, etc. were considered low cost or cheap transportation alternatives and they didn't have much success. Subsequently, they began testing their vehicles outside of the US market, for many years before introducing the same vehicle to the American public. Essentially, they got all of the bugs out of the vehicle before the American public ever drove one, a practice that continues to this day.
Perception is reality. What do we really know about the client's needs vs. what we perceive? The client has shown us that they are unwilling to pay a premium fee for the product we deliver. Why do they consider it marginal to their needs? They have abandoned first person dealings with the appraiser in favor of having AMC’s handle the hassle.
What must we do to change the system, product and the client's perception and how can we accomplish this? Step outside the box and cite 5 factors (from the client's perspective) that are (or would be) invaluable to their valuation needs and that could be provided by the appraiser, as opposed to an AVM or BPO.
Two key factors have already been cited above, turn-time and reliability. For the “homework assignment”, low fees are not a consideration and cannot be included. In the scheme of things, cheap, is not a function of the lender, it’s a requirement of the AMCs to make their profit for handing the transaction.
Lenders pass on the cost of the appraisal and other services to the borrower, so unless the lender has an interest in the AMC (and some do), low fees should not be one of the factors on your list. Keep in mind, whatever you suggest should be something that could be mandated on a national basis and that could be completed by any appraiser in any market area.
For example, I have a standard two-page housing market addendum, with economic and demographic information that is very useful and provides the reader with supporting analysis linked to the 1004MC addendum. Aside from what I’ve mentioned above, what would you include?
AUTHOR: Patrick Egger is a Certified General Appraiser located in Las Vegas, NV. He teaches continuing education classes on the housing market, appraisal issues for real estate agents and appraisers. He can be reached at lvreqa@cox.net Look for the new Outside The Boxes category for a collection of Patrick's articles on Appraisal Scoop!
Fannie Mae seeks $10.7 billion in new US aid after posting $15.2 billionsecond-quarter lossBy Alan Zibel, AP Real Estate WriterOn Thursday August 6, 2009, 7:25 pm EDTWASHINGTON (AP) -- Fannie Mae plans to tap $11 billion in new governmentaid after posting another massive quarterly loss as the taxpayer billfrom the housing market bust keeps growing.The mounting price tag for the rescue of Fannie and itsgoverment-sponsored sibling, Freddie Mac, is surpassed only by insurerAmerican International Group Inc., which has received $182.5 billion infinancial support from the government so far.Fannie Mae's new request for $10.7 billion from the Treasury Departmentwill bring the total for Fannie and Freddie to nearly $96 billion.Freddie is expected to report its quarterly results on Friday.The government has pledged up to $400 billion in aid for the twocompanies, which play a vital role in the mortgage market by purchasingloans from banks and selling them to investors. They have been undergovernment control since last September, when their near-collapse helpedset off the financial crisis.Together, Washington-based Fannie and McLean, Va.-based Freddie own orguarantee almost 31 million home loans worth about $5.4 trillion. That'sabout half of all U.S home mortgages.With assets of that size, "it's hard for their problems to be small,"said Karen Shaw Petrou, managing partner at Federal Financial Analytics,a consulting firm that advises financial institutions.Fannie Mae posted a second-quarter loss of $15.2 billion, or $2.67 pershare, including $411 million in dividend payouts. That compares with aloss of $2.6 billion, or $2.54 per share, in the year-ago period."We are dependent on the continued support of Treasury in order tocontinue operating our business," Fannie Mae said in a Securities andExchange Commission filing late Thursday.The results were driven by $18.8 billion in credit losses due todeclining housing market conditions, made worse by rising unemployment.Nearly 4 percent of the loans Fannie Mae owns or guarantees weredelinquent as of June 30, up from 1.4 percent a year earlier.The two companies lowered their standards for borrowers during the realestate boom and are reeling from the bust. High-risk loans, nowdefaulting at a record pace, have come back to haunt the companies.Worse still, the recession is causing formerly reliable homeowners withgood credit to default.The Obama administration is expected to unveil its plans for Fannie andFreddie early next year. Options being considered include keeping thecompanies private, winding down their operations, merging them into afederal agency or separating out their bad mortgage assets into a newcompany backed by the government.Meanwhile, the head of the federal agency that regulates Fannie andFreddie Mac, James Lockhart, is stepping down at the end of the month.Edward DeMarco, chief operating officer of the Federal Housing FinanceAgency, was named acting director on Thursday.DeMarco, 49, has worked at the agency since October 2006. Before that,he worked at the Social Security Administration and the TreasuryDepartment.
Protecting Consumers Or Inhibiting Lenders? Vol. 4 | Issue 9 | August 2009 Protecting Consumers Or Inhibiting Lenders? By Phil Hall Next month, the House of Representatives will resume debate on H.R.3126, the Consumer Financial Protection Act of 2009. The legislation, based on an initiative developed by the Obama administration, was introduced by Rep. Barney Frank, D-Mass., and Rep. Maxine Waters, D-Calif., and includes the creation of a new federal entity called the Consumer Financial Protection Agency (CFPA). In testimony last month before the House of Representatives, Peter J. Wallison, the Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute, noted that the new agency would cover an unusually large amount of regulatory territory. "The CFPA, as proposed by the Obama administration, is intended to be an independent agency with sole rule-making and enforcement authority for all federal consumer financial protection laws, with the exception of those covered by the Securities and Exchange Commission and the Commodity Futures Trading Commission," he says. "The draft legislation submitted by the administration gives the agency jurisdiction over all companies, regardless of size, that are engaged generally in providing credit, savings, collection or payment services. This is accomplished by transferring to the CFPA most or all of the authorities in 16 federal statutes that cover lending, mortgage financing, fair housing, credit repair, debt collection practices, fair credit reporting, and a multitude of other consumer financial products and services." Within Washington, the proposed agency has created something of a turf war between the Obama administration and Federal Reserve Chairman Ben Bernanke, who has voiced opposition to having regulatory authority transferred from his agency to the new CFPA. Industry observers have a mixed reaction to the CFPA. Although some believe the notion of an agency that specifically focuses on protecting the rights of consumers is well intended, others express concern that the new agency will wind up being too overprotective - to the point of inhibiting the full recovery of the ailing mortgage banking industry. For Dr. Anthony Sanders, professor of finance at George Mason University in Fairfax, Va., having a single regulatory entity that would focus on the financial protection of consumers would help chop away layers of overlapping regulatory entities in Washington, D.C. "I think integration on consumer-protection regulation is long overdue," he says. "On mortgage lending, for example, we have the Fed, the Department of Housing and Urban Development, the Federal Trade Commission, and who knows who else all trying to write regulations. Integration is good - or it should be, if done correctly." Dr. Charles Geisst, professor of finance at Manhattan College in the Bronx, N.Y., and author of "Wall Street: A History," concurs. "It addresses one of the major shortcomings of U.S. financial regulation as we know it," he says. "The crisis has shown that, despite the fact that regulation was in place, it was inadequate. That still needs tightening up." However, questions are being raised on whether a new agency is needed or if existing regulatory agencies need to do a better job. Michael L. Larssen, president of Larssen Consulting in Clearwater, Fla., acknowledges that Washington isn't lacking in regulatory entities. "It is hard to argue against an agency that has such a distinguished name," he says. "I think the intent of a centralized focus of one agency for the benefit of the consumer is the main point. All of these bodies that do things differently create a real struggle to work through. The challenge is why a new agency needs to be created when existing agencies have the authority and haven't used it." One key problem among the agency's critics is the requirement for lenders to offer what is called "plain vanilla" products and services, which are defined as "standard consumer financial products or services" that are "transparent" and "lower risk." Wallison worries that forcing originators to offer these types of products will inhibit product innovation. "This idea, seemingly quite simple, raises a host of significant questions," he says. "If there is a plain-vanilla product, who is going to be eligible for the product that has strawberry sauce? In other words, once the baseline is established for a product that can or must be offered to everyone, who is going to be eligible for the product that, because of its additional but more complex features, offers financial advantages?" Mark Calabria, director of financial regulation studies at the Cato Institute, echoes this apprehension. "If you want to offer adjustable-rate mortgages (ARMs), it will be almost not worth the while," he says. "If you have the government come up with a standard product, it is almost offensive - why not have literacy tests to get an ARM?" Calabria adds that the CFPA would be structured in a way that would cancel the checks and balances that exist in the multi-layered regulatory structure now in place. "Consider the people who do Community Reinvestment Act enforcement," he continues. "They approach it by believing every bank is not doing enough lending. But working in the regulatory agencies is someone else who looks at this and is saying, 'Slow down a bit.' My concern is a consumer protection agency with no concern for safety and soundness and no discussion of balance." Sanders agrees, stating that this is the major stumbling block of the CFPA schematic. "I think the section that requires lenders to offer plain-vanilla products is horrible," he says. "What defines plain vanilla? Are free prepayment options plain vanilla, or are low-cost, no prepayment option loans plain vanilla?" For Thomas Pinkowish, president of Community Lending Associates in Essex, Conn., another key problem is who is going to be enforcing these regulations. "To set up a huge new agency, where are they going to find the people to run it?" he asks. "Are they going to rip them out of existing agencies? Everyone there will have to learn what to do. Think of the cost of recreating the wheel, which will be passed on to consumers - it is better to spend money on existing examiners and enforcing existing laws." If the CFPA becomes a reality, it could easily be attributed to the negative image that many Americans have of the financial services industry. "To justify this new level of interference in the market, the government relies on the myth that the financial crisis, including the precarious finances of those who borrowed money through mortgages or maxed-out credit cards, is largely the fault of devious lenders manipulating and exploiting innocent consumers," says Alex Epstein, a business analyst with the Ayn Rand Institute in Irvine, Calif. "This is nonsense - no one has provided any evidence for a mass epidemic of fraud. The crisis is fundamentally the result of borrowers and lenders knowingly lowering their standards, incentivized by a government that, in effect, lent out money for free (below the rate of inflation), that guaranteed risky mortgage loans and that repeatedly denied a real estate bubble. It is government manipulation, not lender manipulation, that caused Americans to take on enormous, unsustainable amounts of debt." For David Lykken, managing partner of Mortgage Banking Solutions in Austin, Texas, CFPA may not be the end of the regulatory road, but a beginning of a new and potentially unpleasant journey for mortgage bankers. "It is not a surprise that the blame for the unraveling of the entire economy lands at the feet of the housing and mortgage market," he says. "Brace yourself - this is the tip of the iceberg. It will add a burden and cost structure to doing loans - which will be paid in fees to consumers. Yes, the consumers are the very ones who will be paying for this." (Please address all comments regarding this article to Phil Hall, editor of Secondary Marketing Executive, at hallp@sme-online.com. © Copyright 2009 Zackin Publications Inc. • All Rights Reserved. Forward this message to a friend. | Register to receive this newsletter If you no longer wish to receive this type of message, please unsubscribe. Secondary Marketing Executive Zackin Publications Inc. | P.O. Box 2180 | Waterbury, CT 06722-2180 | US
By Jed Smith, Managing Director, Quantitative Research
A preliminary analysis indicates that the implementation of the Home Valuation Code of Conduct (HVCC) appears to be having adverse impacts on the housing markets. Appraisal issues associated with the implementation of HVCC have recently been in the news. NAR Research has developed information on the subject through a statistically representative survey of the membership. A preliminary analysis of Realtor® responses includes the following:
The above are preliminary results of the survey. An analysis of survey responses at the state level is projected in the near future.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
Comments? Questions? E-mail NAR Research.
After months of low rates some of which broke long-time records, mortgage interest rates shot up drastically during the week ended June 4.
Freddie Mac released the results of its Primary Mortgage Market survey this morning, showing that the 30-year fixed-rate mortgage (FRM) for the week averaged 5.29 percent with 0.7 point. This is the highest rate for the 30-year FRM since the week ended December 18, 2008 when the average was 5.19 percent. The new number is an increase of 37 basis points over last week's average 4.91 percent with 0.7 point.
The 15-year FRM increased 25 basis points from the previous week to average 4.79 percent. Fees and points were unchanged at 0.7. The 15-year was last at these levels during the week ended February 12 when the average was 4.81 percent.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) was also up, but not as dramatically. The average last week was 4.85 percent with 0.6 point compared to the previous week when it averaged 4.82 percent also with 0.6 point.
The one-year Treasury-indexed ARM jumped to 4.81 percent from 4.69 percent. Fees and points remained at 0.6 point.
"Yet, there are signs that the housing market may be moderating. Housing affordability rose in April to the second highest reading since January 1971 when records began, according the National Association of Realtors® (NAR). As a result, pending existing home sales rose for the third consecutive month by 6.7 percent in April and represented the largest monthly increase since October 2001. Three of the four regions experienced increases, led by a 33 percent jump in the Northeast, the NAR reported."
There were also substantial increases in the weekly yields reported by Fannie Mae on Monday. For the week ended May 29, the 30-year FRM increased from 4.49 percent to 5.02 percent. The 15-year FRM averaged 4.42 percent compared with 4.04 percent a week earlier, and government guaranteed FHA/VA mortgages jumped from 5.34 percent to 5.88 percent. The one-year ARM increased only slightly from 3.42 percent to 3.48 percent.
All Fannie Mae yields are reported net of servicing fees.
Search for new homes, condos, and other real estate in Washington, D.C., Maryland and Virginia.
It may not have made a big splash on network news or in print, but for real estate it was the equivalent of a congressional declaration of war -- a war against mortgage fraud.
Just as security and intelligence agencies were given huge funding boosts by Congress after 9/11, the FBI, Justice Department, Secret Service and U.S. Postal Service combined have gotten half a billion dollars in new funding authority to investigate and prosecute individuals and companies suspected of mortgage fraud. President Obama signed the legislation May 20.
The targets range from people who lie about their incomes on home mortgage applications to highly organized roving networks of "foreclosure relief" scammers who bilk money out of homeowners seeking mortgage modifications.
Known as the Fraud Enforcement and Recovery Act of 2009, the legislation will fund new SWAT teams of fraud-busters and broaden federal legal powers to go after individuals and mortgage operations that currently get attention -- if at all -- only at the state or local levels. The law also creates a Financial Crisis Inquiry Commission with broad powers to investigate who and what got us into the real estate mess, starting with the subprime boom, Wall Street hanky-panky and more recent bank failures.
How bad is mortgage fraud? The Treasury Department estimates it causes losses of $15 billion to $25 billion a year to consumers and the mortgage industry. FBI Director Robert Mueller told Congress that his agency's mortgage fraud caseload has tripled in the past three years. Reports of potential fraud filed with the Financial Crimes Enforcement Network exceeded 65,000 in 2008 -- up from about 25,000 in 2005 and just 5,400 in 2002. Officials say the recession and the end of the housing boom have actually stimulated more fraud rather than the reverse.
What do these frauds look like and where are they occurring? The Mortgage Asset Research Institute performs an annual study of the problem for the Mortgage Bankers Association, and its 2009 report found that:
-- Roughly two-thirds of all frauds involve deceptions at the application stage. For example, some borrowers tell the lender they plan to occupy and use the property as their main residence, but they really plan to turn it into a rental unit. That use often gets the applicant a lower rate on the loan, but it's a violation of federal law.
-- About 28 percent of frauds last year involved deliberate misinformation about tax returns or financial statements. Fake IRS filings can be created with readily available software programs, and documentation of financial assets can be manipulated as well. Around 21 percent of fraudulent applications contained faked deposit verifications last year.
Some fraudsters even go so far as "renting" bank deposits to loan applicants who need to bolster their financial profile. For a fee of $1,000 and higher, you can become the "owner" -- at least on paper, for a short period of time -- of an actual bank account controlled by the asset rental company. The lender receives a verification of a deposit in your name but has no idea you're only renting the bank account to hoodwink underwriters.
-- Appraisal shenanigans rank high as well and were involved in about 22 percent of fraud cases in 2008. Appraisal fraud -- typically inflated valuations intended to squeeze more mortgage money out of the lender -- may be more commonplace than the statistics. Many overvaluations are modest enough to avoid detection but large enough to get the loan closed, thereby increasing subsequent risk of loss to the lender.
-- Other widespread forms of home-loan fraud include faked employment verifications, misinformation on closing or escrow documents, and credit reports or scores that have been manipulated to get unqualified borrowers approved -- or lower interest rates -- or both.
According to the 2009 report from the mortgage researchers, the top 10 states where disproportionate numbers of frauds occur are not necessarily where you'd guess. For example, the No. 1 state for mortgage frauds last year was tiny Rhode Island. Next came Florida, Illinois, Georgia, Maryland, New York, Michigan, California, Missouri and Colorado.
Maryland had the highest percentage of frauds involving bogus tax returns. In California, nearly 40 percent of fraudulent applications carried incorrect verifications of deposits or bank statements.
With the federal agencies gearing up new prosecution teams devoted to detecting and fighting mortgage fraud, scammers should be on notice: Now more than ever, you're likely to end up before a grand jury, get smacked with a big fine or do prison time.
Ken Harney's e-mail address is kenharney@earthlink.net.
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