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Friday 7 November 2014

FRAUDS IN HOUSING FINANCE

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Fraudulent activities aren't un-common within the dealings of kinsfolk. Housing finance isn't any exception to the present. To draw in the folks money corporations and banks are currently competitor with one another and are quiet their loaning procedures and processes. We tend to browse in news papers that home loans are sanctioned inside twenty four hours and upon verification of minimum documents. Services of external agencies are utilized for process loan applications. Services of direct merchandising agents are utilized to draw in the shoppers. The sacred precincts of the bank have given thanks to brokering outlets gone by direct merchandising agents. Of these factors became instrumental in housing finance frauds. The magnitude of housing frauds is often observed by analyzing few sorts of frauds detected by numerous banks. They are:

Fabrication of financial gain documents:
For thought of housing loan, banks do insist the financial gain proof of the receiver. The financial gain proof documents in the main accommodates regular payment certificate, regular payment slip, income-tax come and balance sheets. The borrowers ordinarily fabricate the documents that depict their financial gain. Banks are typically fooled by inflated Salary certificates as a result of they fail to cross check such certificates with the employers of the candidates. These certificates are typically certified by unauthorized persons. The rationale for such frauds may be that the banks don't impose the documents being sent by the leader by post or traveler. Conjointly the banks don't write on to the leader for these documents. Reliable strategies are sacrificed at the altar of speed. 



Some preventive steps may be :to cross check the regular payment slip with the employer; uploading on the website of the revenue enhancement department the list of revenue enhancement payers; scrutiny the regular payment quantity with the bank statement; to possess a private interview with the receiver by the Manager.

Fraudulent cheque/demand draft encashment:
In several cases, the bank officers provide cheques/demand drafts to the receiver/vendor at the venue of the bank itself before registration of the sale deed in favor of the borrower and such cheques are typically delivered to 3rd parties or middlemen. Once such cheques or demand drafts fall under the hands of third parties they encase them by gap false bank accounts and mulct the banks. There are cases wherever the properties are registered within the name of parties apart from the receiver. Some preventive measures may be: to hand the cheque to the seller at the workplace of the sub registrar once the sale deed is registered and also the deed ought to have the total details like cheque range, date, quantity and also the remunerator bank. Or else, cheques is also issued within the banker's name with the bank account range of the seller. 

Forging of title documents
As a rule, advocates ne'er certify the legitimacy of title documents however solely trace the title. This becomes a lot of difficult once the bankers forward solely the Xerox copies of the title deeds for opinion of the advocate. Until payment of the loan quantity neither the bank nor the advocate insists for production of the first deeds. Generally, to give impact to such frauds, colored Xerox copies of documents like encumbrance certificates are created. Pretend stamp papers are used. Such solid documents are exhausting to be distinguished from the authentic ones. However, an seasoned advocate is also ready to notice a solid document once he circumstantially examines the document to see the place of registration and also the tax paid.

Further, tracing of the title ought to visit the roots of the title and not be restricted to 13 years. It necessary to look at the first title deeds sufficiently beforehand and may not be deferred up to the date of registration. There ought to be direct interaction between the seller and also the banker. Asking ought to be created to the advocate on the panel to look and verify the title of the seller from the records of the sub-registrar's workplace. Remedial measures may be that the data of the black listed builders and developers, if any, ought to be shared by all the banks; the documents like agreement purchasable ought to be in DEMAT form; The legitimacy of sealed paper, documents and registration receipts ought to be verified by banks at the sub-registrar's workplace. 

Over-valuation of properties:
Generally, some borrowers conspire with the vendors/valuers to inflate the value of the property. numerous non-existent expenditures like extra amenities, fixtures, legal charges, society advance and maintenance charges are cited. Advances are discharged on properties that are overvalued resulting in over finance. Attributable to this, the banks aren't ready to understand the number advanced whereas the borrowers are least fazed concerning clearing the debt. Remedies may be utilization of services of 2 independent values for valuation of property value over Rs. 25lakhs; introduction of certificate course for approved valuers; development of in-house experience by banks for the correct valuation of properties

Multiple financing:
Some dishonest  persons turn out fancied documents to totally different banks or housing finance agencies in respect of one property to get loan from every bank while not the information of the opposite in respect of constant property. Remedies to prevent such frauds may be to introduce the DEMAT format purchasable agreements, insistence for production of original title deeds by the financial organization, introduction of registration of mortgage deeds. 

Cancellation of booking for flats:
Another sort of fraud detected is that a number of the borrowers cancel their bookings for studios inside a handful of months once getting the loan from the bank and procure the refund of the cash paid towards the flat directly from the builder while not the information of the loaning bank. In these cases, aside from personal liability of the receiver, the banks don't possess any security for the number that has been advanced. a method to curb such mischief is to insist for an enterprise from the builder stating that just in case the booking for any flat by the borrowers is off, the advance quantity are directly remitted to the bank. Additionally, it's higher to pay the initial loan quantity on to the builder on behalf of the receiver. 

Fake or duplicate title deeds:
In this sort of fraud, the receiver of the bank sells his property with the assistance of duplicate or pretend title deeds before clearing of the loan quantity although legal title deeds over the property are deposited with the bank or housing non-depository financial institution. To forestall this kind of fraud, banks are currently obtaining the memoranda of deposit of title deeds registered so the very fact of mortgage of property is mirrored within the encumbrance certificate. 

Utilizing housing loan for business property
Housing finance corporations and banks grant loans at concessional rate of interest in respect of residential buildings. Additionally, rebate is additionally out there to the receiver on such housing loan. In some cases, the housing loans obtained by the borrowers are literally used for purchase of economic property. To avoid such abuses, it's instructed that there ought to be review and verification of the property by officers of the bank to search out whether or not it's residential or business property. 

Outstanding loans from the builders:
There are cases wherever the builders sell the property while not repaying the loan obtained from the bank or housing non-depository financial institution. The loan availed by the developer or builder needs to be verified by the banks at the project clearance level. At the time of appraisal, the banks ought to take into account solely the first documents and not the other sort of document. an analysis of the higher than would visit show that there are totally different types of frauds adopted by folks relating to housing finance and no straight jacket formula is accessible to remedy such frauds. However, alertness and strict adherence of the procedure set down may scale back dishonest banking transactions.


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