Nevada Second in Nation in Home Foreclosures

As the Las Vegas Valley housing market begins to slow and the number of foreclosures in the area begins to climb, multiple instances of mortgage fraud are being uncovered by local law enforcement, the Nevada state Mortgage Lending Division, and the Federal Bureau of Investigation.

Nevada has the second highest foreclosure rate in the nation, a figure that is expected to climb in 2007. Pete Dustin of the Las Vegas Metro Police said, "When everybody is getting paid, nobody cares. The second they start instituting foreclosure proceedings, they pay attention. The lending institutions are going to start screaming."

Most of the complaints in question are matters of falsified mortgage applications that contain exaggerated income disclosures or claim that the property is an investment rather than a primary residence.

According to numbers compiled by RealtyTrac, one out of every 452 homes in Nevada entered the foreclosure process in September bringing the total number in foreclosure to 1,919. That's a jump of 237 percent from 569 properties last year.

Nationally one of every 1,030 home files for foreclosure in September. Colorado edged out Nevada for the top spot with some 408 homes entering the process.

The commissioner of the Nevada Mortgage Lending Division, Scott Bice, said, "This is as high a complaint log [as] I have seen in three years in business and I don't see it slowing down."

A typical case, said Bice, was one of an elderly woman with a credit score of 800 who reported a monthly income of $6,000 in order to qualify to purchase a $150,000 home. Her true income was $900 a month and she spent $150,000 to upgrade the home so that she was unable to afford the $3,500 mortgage and wound up in foreclosure.