BNC Mortgage Fraud and Forged Loan Documents
There are a number of reasons which gave rise to the subprime mortgage crisis. We cannot blame the lenders or real estate agents alone for giving rise to such a situation. The borrowers are also responsible to a great extent. Due to the fraudulent activities of many borrowers and property appraisers, many lenders had to shut down their establishments. To site an example, BNC Mortgage LLC, which was a HUD approved sub prime buy to let mortgage lender and subprime lending unit of Lehman Brothers had to close down. Regarded as one of the biggest 20 subprime producers, the company approved approximately USD$14 billion in loans in the year 2006.
Inflating income to qualify for mortgage loan
Fraudulent activities have destabilized the banking sector, the real estate market and the economy as a whole. Several instances of mortgage fraud have been reported. One of the notable examples is the BNC mortgage fraud and forged loan document incident. It was reported that a couple from Ohio had applied for a mortgage loan of USD$367,200 from a company called Countrywide in the year 2004. The loan was availed to buy a new home in Ohio. The loan application was manipulated and the income was inflated so that they could qualify for the loan.
Forging documents for a third time
The property was quit claimed in the year 2005. In August 2006, they refinanced for USD$426,000 from another lender, again inflating their income in the loan application this time. BNC Mortgage LLC refinanced (for USD$479,750) their loan again in October 2006. For the 3rd time, they forged the loan document to show a raised income to qualify for the refinancing option. In March 2007, they filed for bankruptcy so that they didn’t have to make payments to BNC. Nevertheless, their debts were discharged. Reports suggest that the Ohio couple had used the premises for manufacturing and distributing illegal drugs.
The aforesaid scenario indicates that the couple caused collateral damage. They not only forged the loan application to qualify for the loan but were also engaged in an illegal profession.
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