Filed under: Mortgage Fraud — admin @ 4:40 pm
CNNMoney.com reports: “Mortgage fraud still soaring: A crackdown on underwriting has failed to halt an explosion of fraudulent home loans.”
“With the housing market in turmoil and lending standards tougher than ever, you’d think that the kind of unscrupulous activity that helped plunge the industry into crisis would be a thing of the past.
You’d be wrong. Mortgage fraud is still soaring, according to a new report from the Mortgage Asset Research Institute (MARI), a division of ChoicePoint. (CPS)”
Read the full article here.
Why is fraud still spiking? The article reports that with the current credit crunch and increased restrictions, fewer and fewer homebuyers are able to qualify for loans without a little innovation. One expert quoted in the article claims that, because mortgage brokers are still paid on commission, we shouldn’t be surprised by these numbers, but offers no solution to the current state of affairs.
Filed under: Mortgage Fraud — admin @ 8:00 am
Mary Kladde
When is the right time to be checking for Fraud?
All the time is the right answer, but practically speaking, fraud checks should be performed as a standard function of underwriting. Why go through the entire process to run the check when drawing documents for closing only to find that there are fraud related issues and alerts?
What a waste of time and energy on the cost of personnel and materials …which ultimately translates into money further lowering your net bottom line income on a per file basis!
Underwriting is where the “buck should stop” related to fraud. Has the lender and/or loan officer been cleared related to licensing? Are the borrowers good to go? Has there been an unusual amount of activity related to a given property address?
You shouldn’t wait until closing, shipping, or purchasing to discover there are issues. The tools exist to assist. It is just a matter of initiating a process change.
Filed under: Mortgage Fraud — admin @ 9:36 am
Mary Kladde
This story appeared in the MBA Tech Newslink on April 1:
New research from TowerGroup, Needham, Mass., predicts that losses from mortgage fraud will reach $2.5 billion in 2008 and that comparable losses could continue for several years to come.
The report, U.S. Mortgage Fraud: Types, Trends and Detection Tools, found that the scope of fraud—by and against lenders—continues to increase, despite renewed efforts by lenders and law enforcement to crack down. The report said lenders will respond to fraud by deploying technology tools to assist in detection and prevention and that their annual spending on such tools will reach several hundreds of millions of dollars in the next few years.
I also just read a blurb about the MBA’s wholly owned subsidiary, Lender Technologies Corp., in the 4/1 regular MBA Newslink putting out a RFP Request for creating a national database to help prevent and detect mortgage fraud.
I find it very interesting that with all the headlines fraught with stories, concerns, expressed need, and reaction towards fraud that lenders and investors seem slow to move on using tools that already exist and are accessible.
Fraud tools and technology exist today. Fraud tools and the corresponding technology existed 3 years ago. The problem is not having the tools to help detect fraud. The problem is that lenders are not using these tools because they are not required by purchasing investors when loans are being bought and sold.
You get what you ask for right? If you tell a little kid they have to wash their hand sbefore giving them a piece of candy, what is the result? 9 times out of 10 you get Clean Hands…at least that’s the way it works in my house.
