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Special Reports
In this section of BrokerUniverse we examine a subject of key importance
for mortgage originators every month, based on special reports that run in our sister publication, Origination News.
Mortgage Fraud: Protecting The Investment
Mortgage Fraud: Protecting The Investment
According to mortgage fraud experts, there are two classifications of mortgage
fraud: fraud for commission and fraud for profit.
Fraud for commission is when someone in the process - the borrower, the real estate
agent, the loan officer, the mortgage broker, the mortgage banker, the appraiser - alters or stretches the truth
or just outright lies in order to put the borrower in the house. The usual motivation is for the professional to
collect his or her fee, although some who have committed this type of fraud claim they were trying to be altruistic
and get the borrower into a home. Early payment defaults are not typically an issue in these situations.
Fraud for profit usually involves overt acts, such as loan flipping, to drive
up the value of a property. In these situations there is usually an early payment default as the fraudster takes
the mortgage loan proceeds and disappears.
Ironically, many mortgage frauds have been hidden by the huge increase in housing
values in the past few years. In many cases (especially in fraud-for-commission acts) the rising values enable
lenders to recoup their losses. However, as interest rates start to rise, more instances of fraud will be discovered.
In this Special Report, read that the new hot spots for fraud are Atlanta, Nevada,
Detroit and Utah. Read how regulators in Kentucky are cracking down on "dual contracts," where the true
purchase price is obscured.
A New York State regulator instructs loan professionals on what to look for in
a fraudulent application, while the state's Banking Department has issued a warning on an identity-theft scam.
The alert applies nationwide and is about a fictitious credit union's loan application scam.
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