Beware the builder's lender
So much of the fun in buying a newly built home comes from being able to choose the upgrades that tailor it to your tastes. Want steam vents in the shower? No problem. With a swipe of the pen, they're yours. And for now, at least, many builders are offering such goodies at no extra cost. Usually, though, there's a condition: The builder will pick up the tab only if you get your mortgage through its preferred lender.

Title Insurance Debate, Round Two
Just 5 percent of your title insurance premium is used to pay claims, says the federal government, while 70 percent is paid out in the form of agent commissions. But fixing prices, as is now the case in New Jersey, absolutely eliminates any competition of interest to consumers. Without price competition, consumers have no reason to prefer one price-fixed title agent over another price-fixed title agent. One correspondent said those who wish to complete would be "violating the CURRENT title laws by offering discounts."

Wells Fargo settles subprime class-action suit
Wells Fargo & Co. has settled a class-action lawsuit over lending practices at its Wells Fargo Financial Inc.'s mortgage unit, which focuses on the subprime market.The Association of Community Organizations for Reform Now, or ACORN, had alleged in the lawsuit, filed in 2003, that Wells Fargo Financial failed to properly disclose points and prepayment penalties to borrowers, and inaccurately reported loan balances for some California customers to credit reporting agencies.

Nine Arrested On Mortgage Fraud Charges
The FBI arrested nine people Wednesday on charges of engaging in a multimillion-dollar Queens-based mortgage fraud conspiracy, authorities said. Assistant FBI Director Mark Mershon said 10 people were named in court papers, which identify three of the conspirators as principals in New Generation Funding, a mortgage broker with a branch office in Jackson Heights. Court papers say they recruited "straw buyers" from the Bangladeshi community to purchase properties with false identities and to secure mortgage financing.

Alleged ring leader pleads guilty in mortgage fraud case
A man accused of being the leader of a mortgage fraud ring pleaded guilty Friday to wire fraud. Kourosh Partow was part of a group of seven Anchorage residents federal prosecutors charged with deceiving mortgage lenders by overstating income and assets on loan applications.

Beware of Builders Bearing Gifts and Pushing Lenders
Builders can't force you to use any particular lender; federal law prohibits it. Nor can they dictate whom you must use for other settlement services, such as the title company or homeowner's insurance provider. (Lenders can choose who will perform the appraisal.)... Ryland Homes, for example, has an in-house mortgage company, Ryland Mortgage, which deals only with people borrowing to buy a home built by Ryland. Brookfield Homes, the company offering as much as $100,000 in concessions, owns a mortgage subsidiary called the Mortgage Group. Although the law says builders can't force you to use their in-house lenders, nothing says they can't do their best to entice you to keep all your business under their roof.

Wasington Post - Appraisal Inflation
Lender complacency about appraisals also has enabled con artists to bilk banks and investors of billions of dollars in home-mortgage-fraud schemes. The four appraiser groups cited FBI estimates that mortgage-fraud losses are now approaching $3 billion a year -- and many of those schemes start with intentionally inflated property valuations that lenders fail to spot.

Lee buyers claim fraud
A Miami couple says a mortgage company affiliated with Fort Myers-based First Home Builders altered information to enhance their financing application without their knowing it, jacking up the value of their residence and length of time the husband had been at his job...Officials with K. Hovnanian Enterprises, the parent company of First Home, said their own employees did nothing wrong and the mortgage company, Builders Mortgage LLC, is the responsibility of Wells Fargo — Hovnanian’s partner and 51 percent owner in the joint venture.

Builder not buying couple's bid to back out
Officials with home builder K. Hovnanian Enterprises say a couple who claim their loan application was altered without their knowledge are actually savvy, well-heeled investors who just want out of a bad investment. But the Miami couple say they're unsophisticated buyers and alterations to a loan document made by a mortgage company affiliated with Hovnanian tricked them into buying property they couldn't afford...Chen-Walta said they assumed the information on the document was the same as on their handwritten statement and simply missed the changes. "The fact of the matter is we can't make the payments on those loans. My husband isn't working," she said. "We're not sophisticated investors."

U.S. Plan for Subprime Loan Susceptible to Fraud (Update1)
A Bush administration plan to offer low- and middle-income home buyers an alternative to subprime loans may be susceptible to fraud, the inspector general for the U.S. Department of Housing and Urban Development said. The proposal, incorporated in legislation introduced last month, would make it easier for borrowers to get mortgage insurance from the Federal Housing Administration but do little to assure adequate oversight of lenders, appraisers and lawyers, Kenneth Donohue said in a telephone interview.