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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.
Fraud Detection
Looking Closely At The App
Studies have shown that most mortgage applications contain some sort of material
factual error.
But no matter how innocuous the misrepresentation might be, from an ethical (and
quite likely legal) standpoint, the applicant has committed mortgage fraud.
Most mortgage fraud experts divide the situation into two different types of activities
- fraud for housing and fraud for profit.
Fraud for housing occurs when any participant in the process plays with the information
(such as lying about income or stretching ratios). The ultimate goal, no matter how worthy, is to get a customer
into a house he or she is probably, from an underwriting standpoint, not qualified to own.
Fraud for profit is an organized scheme such as flipping. Flipping occurs when
a property is sold among related parties several times with the goal of driving up the appraised value. When the
perpetrators reach their target point, they take the loan proceeds and disappear.
As rates continue to rise, mortgage lenders will likely see increases in both
types of fraud. But the point most experts make is that even with all of the technology that can be used to forge
documents, traditional examinations of all of data supporting the loan should catch the majority of fraud.
In this Special Report, read about Sysdome's newest product aimed at detecting
valuation discrepancies. Another method to catch fraud is to compare verifications of employment and income to
one's tax form. AppIntelligence has automated the process of ordering copies of a customer's tax return.
Also read about how the Mortgage Bankers Association looked to inform Congress
about the impact mortgage fraud had on the business.
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