Mortgage Mistake: Don’t Lie About Your Income

George Wyatt - Real Estate Broker (2)

A lot has changed in the mortgage market during the past few years. Home prices have improved, sales have gotten more competitive — even mortgage fraud has taken a different route.

Mortgage application fraud risk is down 5.6% year over year in the second quarter of 2013, according to the most recent CoreLogic MarketPulse, a monthly look at the U.S. economy and housing. What’s more interesting is the fraud trend; the reports says the industry has seen a tendency toward income-based fraud, potentially because of ability-to-repay requirements and rising property values.

As part of legislation enacted after the collapse of the sub-prime mortgage market, lenders now have to verify a mortgage applicant’s ability to repay the loan if it’s a typical mortgage (such as through Fannie Mae, Freddie Mac, the FHA or VA).  One big problem that contributed to the housing crisis was the stated income loan, in which borrowers needed to provide little in the way of verification that they could repay the loan. The ability-to-repay requirement is designed to prevent lenders from approving mortgages borrowers cannot afford, and therefore some consumers may find financing out of reach. This could make it more likely that applicants try to falsely claim an income that’s needed to acquire the mortgage, CoreLogic reports.

Adding another layer of change, a new debt-to-income ratio limit goes into effect Jan. 10, meaning a borrower’s debt load cannot exceed 43% of his or her annual income. (At the moment, those limits vary by lender but can be as high as 55%.) A lender needs to verify all of this information through third-party sources, so while falsifying the numbers on your application is a bad idea in general, it’s not going to get you very far, either.

On a geographic level, the places with the highest mortgage fraud risk were the areas in and around Atlanta; Miami; Tampa, Fla.; Riverside, Calif.; and Washington, D.C., as shown by an analysis of the largest metropolitan statistical areas. While it has the highest propensity for fraud, Atlanta is also considered an affordable city for buying a home, while Miami is one of the least affordable, according to a recent study by Interest.com.

The dollar value of fraudulent loan applications increased from the first quarter to the second quarter, but it did so alongside an increase in overall applications, so the quarter-to-quarter risk index remained the same.

Other highlights from the quarter include a decline in underwater mortgages in every state, particularly in Nevada and Georgia. In the second quarter, 14.5% of borrowers were underwater, down from 19.7% in the first quarter and the recent peak of 25.2% in the fourth quarter of 2011. Foreclosures have also continued to decline, with distressed property volumes falling in 96% of metro areas.

By Christine DiGangi

What To Do With All Those Leaves In Your Yard

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Around The Home

raking leaves-fall-home-upkeepThe kids are back in school, the weather is getting cooler and your yard is covered in a layer of fallen leaves. Yep, it’s that time of the year again, but don’t think of fall leaves as a chore. They can be a useful resource for fertilizing your lawn or even decorating your home for autumn.

Finish The Raking It’s tempting to just let the leaves lie in the yard. It’s good fertilizer anyway, right? Wrong. You should rake everything up as soon as the trees begin to look bare, or else risk the blanket of leaves smothering your lawn over the winter season. Gather them up in plastic bags and put them to use.

Refuse To Rake Leaves If you can’t bring yourself to pick up a rake, you do have an alternative. Wait until the leaves are dry and crunchy and fire up the lawnmower once more before winter. Many mowers have a mulch setting that will chop the fallen leaves to bits.

The smaller pieces won’t suffocate your lawn, and the crushed leaves make a good fertilizer. If you’d rather use the leaf bits in the garden or a flowerbed, use a grass clipping catcher with your mower to gather up the pieces as you mow.

Use Mulch And Fertilizer Fresh chopped leaves are a good homemade mulch. Put a layer on the garden and the flower bed to replenish the soil over winter. Also, be sure to put a thick layer around young trees and shrubs to keep them warm. If you really want to get the most out of your leaves, then take them to the compost pile.

Mix the leaves in with the regular green yard waste, and the leaves will boost the composting process into overdrive. The fully composted material makes a potent fertilizer.

Get Crafty Set some leaves aside to take indoors. The changing colors of the fall leaves are part of the beauty of autumn. Why not bring some of that beauty into the house?

Fill a vase with leaves for a seasonal centerpiece, or use a wire frame to make a wreath for the front door. You can make leaf etchings with the kids or simply use one as a bookmark.

It’s sad to see so many fall leaves burned up in piles, or put out with the trash. The leaves on the lawn aren’t just a mess to be cleaned up. Inside or outdoors, autumn leaves are an easy, natural, and free material. Be sure to put them to use!