Published on February 07, 2019
Written by Joseph Prettner
One easy example? Many mortgage providers are advertising online mortgage applications closing in just 7 – 10 days with minimal or no interaction with the borrower. This innovation is great for the bottom line, but it is also creating opportunities for digital-age fraudsters to intervene.
Fannie Mae itself has been following a developing fraud scheme where 40 different “companies” were listed as the borrower’s purported place of employment. These 40 appeared to be fictitious as Fannie Mae could not confirm their existence. Check out the full write-up.
These fraudulent applications can now get further down the road as technology makes it easy to create a legitimate-looking paystub and employment documentation to satisfy secondary market standards. Fraudsters may even be researching how to get past the secondary market’s quality control (QC) requirements and verifications.
Servion’s quality control department recently uncovered borrower misrepresentation of income where the employer was a legitimate business with a valid Secretary of State filing and active company status. This employer was providing the paystubs and W-2 forms to our borrower, which satisfied all initial underwriting and quality control review requirements including a reverification. We were only able to identify the income misrepresentation when we dug a little deeper and uncovered that the company had no recorded income for the years the borrower worked, and the paystub funds never showed up in the borrower’s account statements.
Our team was suspicious due to an asset statement coming back as altered. In other words, the bank statement the borrower submitted was fake. After we received this information we compared it to other statements and it was impossible to identify without completing a verification of the funds in the account.
Mortgage fraud is becoming just as common as personal credit theft and is very hard to identify without having high-caliber QC to track down the documentation used in qualification and make sure it is legitimate. Review your QC plan and verification procedures and audit your QC vendors to make sure they are adequately protecting your financial institution from fraud. If you don’t feel that your QC is sensitive enough to identify this higher-level of misrepresentation then it probably isn’t.
Thinking about upgrading your Quality Control? Find out how we can help.