Defendants are accused of obtaining more than two dozen subprime mortgages fraudulently
US authorities have charged four individuals in the New York area with a subprime mortgage fraud scheme totalling over $10m.
The defendants are accused of obtaining more than two dozen subprime mortgages fraudulently.
The defendants made several mortgage applications for amounts greater than the value of the actual sale price of the homes they were buying, according to prosecutors. The scheme involved fraudulent appraisals of the homes and misrepresentation of the income and assets of the buyers.
The difference between the inflated value of the mortgage and the sale price of the house was distributed amongst the defendants, before they allowed the mortgages to go into default.
In the days of easy credit, banks lent money freely without doing their due diligence on the borrowers. Now, regulators have begun investigating this deep pool of failed loans to find out how many are fraudulent. It is thought hundreds of millions worth of fraudulent mortgages could be uncovered.