If your firm is involved in mortgage lending, it is affected to some degree by a growing criminal threat: mortgage fraud. Our experts recognize the warning signs and know what to do when mortgage fraud occurs. We can mitigate your company’s vulnerability to fraud and help avoid losses.
Mortgage fraud generally covers lying or misrepresenting the truth about one’s income or employment history to qualify for a loan. The FBI reported that in September of 2002, it had 436 mortgage fraud investigations; as of March 9, 2007, the FBI has more than 1,036, a 138% increase.
This dramatic upsurge has prompted lending institutions and mortgage insurance firms to allocate resources for investigating cases where there is suspicion of fraud, especially after a home has been foreclosed. If you suspect fraud, we recommend retaining a qualified and licensed investigation firm to conduct a quality control audit. Our investigators are well-versed in conducing field interviews, verifying current and previous occupancy and income, and reviewing loan documents.
In 2008 “John” purchased a home after meeting a pleasant real estate agent who convinced him he could afford it. Less than a year later, John defaulted on his mortgage. During our interview with John, we discovered several fraudulent details in John’s loan application. For example, the loan application indicated John earned $10,000 a month; he was actually earning $2,000 a month. Since John used a “stated income” loan program, he did not have to provide income verification.
The loan application also indicated John was an investor and owned his own business; these were outright lies. A phony letter from a CPA firm was submitted with the loan application. In the letter, the alleged President of the CPA firm declared that his firm had completed John’s tax returns for five years and that the last two years, John’s income solely stemmed from being self-employed.
During our investigation, we determined the CPA firm referenced in the letter did not exist. The loan officer and real estate agent are now also under investigation.