Foreclosures linked to subprime fraud

New York has in its tally one of the highest numbers of foreclosures and also highest numbers of sub prime mortgage fraud.A recent investigation revealed that scammer defrauded homeowners and lenders in the state taking advantage of the loopholes in the lending laws of the state. The fraud has happened everywhere in the state.

According to the New York State Commission of Investigations, the borrower should be given more protection through regulation from the predatory lenders.

In 2007, New York of all the foreclosures, 59% involved subprime loans. It had 39,000 foreclosure filings in 2007 which made it to the eight rank in foreclosure behind states like California, Nevada and Florida.

People were given huge amounts as loan, which they could never pay off. The interest rate started high such a 10% as went up to be capped at 16-17%. So, the monthly amount to be paid in some cases came to more than $4000 for which the borrower had to work 400 hours a month. The commission revealed a case of a women who worked as a security guard as an example who had $4,400 to be paid per month for which she had to work more than 400 hours per month.

The main targets were the minority communities. Commission found that New York state African-American and Hispanic borrowers were more at risk as they were twice as likely to have sub prime loans as whites.

Many one stop shops operated as real estate agents and mortgage brokers. They offer poor advice in return of fee and provide appraisers and attorneys who work for them instead of the client. New York has a stronger lending regulation than other states. If this has happened in New York, then other states may well at be higher risk.