Georgia leads the nation in mortgage fraud. 

Florida and California have long been the real estate fraud capitals of the United States, but both of those states have yielded the title to an unlikely new champion - Georgia. The Peach State now leads the nation in fraudulent mortgages and Atlanta is the center of all such activity.

While there is no official estimate of the extent of the theft, an estimate of $100 million or more probably wouldn’t be out of line. This would exceed the stated $60 million or so committed by thieves in South Carolina.

The prominent scheme used in mortgage fraud

in Georgia, like elsewhere, seems to be “house flipping.” A property is sold, sometimes several times in one day, to a succession of buyers. The buyers are usually not legitimate; they are often individuals who are using identity theft to obtain a fraudulent mortgage. Once the loan is secured, the money is split up among the individuals involved, which almost always includes a mortgage company employee and an appraiser. False appraisals are necessary to justify the higher prices and someone on the “inside” at the mortgage company is necessary to make all of the paperwork flow correctly.

When identity theft schemes don’t work, a “straw man” scheme is used instead. In this scheme, an individual with good credit is hired to be the front for the investment group. He or she is told that the property will be rented or quickly sold and that the individual won’t be held responsible for actually making the mortgage payments. Of course, it never works out that way. The investment group leaves the “straw man” with the mortgage while they have run off with the money. The “straw man” is left with a mortgage that he or she cannot pay for and doesn’t want.

This type of fraud hurts neighborhoods, leaving blighted, poorly repaired vacant homes that often turn into drug dens or homes for vagrants. Worse, with homes selling again and again for ever increasing prices, municipalities increase the property taxes for those living in the area. The neighborhood gets more expensive and more run down simultaneously.

Georgia has passed a law making mortgage theft a crime and has become the first state to do so. Anyone convicted of willfully misrepresenting information on a home loan application can be punished with a sentence of up to twenty years in prison and a fine of up to $100,000 per house. Prosecutors have been aggressive and have arrested more than twenty people to date. Estimates are that it may take up to five years or longer to shut down all of the fraud rings operating in the state, however. In addition, anyone might be looking for adjustable loan mortgagemastersonline.com .

This problem is rampant throughout the southeastern United States and continues to spread throughout the nation. Legislatures are working to pass laws correcting the problem, but these things take time and enacting laws and enforcing them cannot be done overnight. In the meantime, people are encouraged to keep an eye on their neighborhood and to watch for an increase in the number of vacant houses.