Noah Grayson, managing director and founder of South End Capital Corp., wrote an excellent article for the Scotsman Guide about how the commercial real estate market is experiencing a rise in loan fraud as loan demand has started growing.

A successful Chicago based construction company hit a brick wall when looking for a revolving line of credit to finance one of its projects. SECC, not fearful of the construction industry and demonstrating its flexibility, provided a 12 month prime based revolving line of credit, with no advance cap.

With the economy improving and capital beginning to flow back into the commercial loan marketplace, unfortunately, incidences of  mortgage fraud are also rising — and at an alarming rate. Because there is no oversight organization designated to report such cases of fraud, it’s difficult to assign quantifiable statistics to the rate of occurrence in commercial lending.

Fear of the unknown is an entirely rational response. The conservative policy of “look before you leap” has always been one of the central tenets of financially responsible and stable lenders.