Tuesday, April 2, 2013

This is just priceless

LOL.. and their putting this on the consumer. Are you flipping kidding me! Not once did they mention how the banks are hedging the fraud into private hedge funds, remaining the trustee of the loans,or that the banks are financing the hedge funds to buy the loans, and charging the consumner anywhere from 20-50 thousand dollars to rewrite the loans, than put them on a 6 month trial period only to deny them after the 6 month period, because it paid for the original amount they were funded. The fraud is still their, the fraud doesn't go away , its just now hidden and homeowners struggling to save their homes are left helpless.They  do not put this on the consumer when the banks are still playing their old games just in a new way. Greg Holmes deeper before reporting more crap.

Mortgage Fraud: Wrestling With the Octopus … and Winning!

Mortgage fraud definitely has not disappeared since a foreclosure crisis helped bring the American economy to its knees. In fact, fraud is occurring more often and in a wider variety of forms. Industry professionals are finding that protecting yourself against this new generation of mortgage fraudsters is like wrestling an octopus; as soon as you triumph over one potential source of shady dealing, seven others are standing behind it to continue the struggle.
Current crime statistics prove that the battle is definitely ongoing. The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) reports a 31 percent increase in reports of suspicious mortgage activity between 2010 and 2011. There were more than 96,000 instances of suspicious activity in 2011, and 2012 shows no indication of a meaningful reverse in the trend.
A recent FBI report on financial crimes pinpoints a key cause of new concern. It notes that fraud cases are diversifying as well as increasing. “For the first time in recent history,” the Bureau stated in its latest Financial Crimes Report to the Public, “distressed homeowner fraud has displaced loan origination fraud as the number one mortgage fraud threat in many offices.” Though the FBI considers loan origination infractions more egregious because of the larger dollar amounts involved, the Bureau “has now adapted its focus to include other new and emerging schemes.”
Beware of new tentacles
Traditionally, mortgage professionals could focus their efforts only on spotting financial misrepresentations by applicants seeking mortgages they can’t afford. It is now necessary to broaden the focus to encompass a whole host of scams.
►Social Security Number (SSN) fraud and identity theft: Use of a social security number or a government identification card that belongs to someone other than the applicant, either to obtain a mortgage or to perpetrate a “fraud for profit” scheme.
►Income fraud: Overstating income to qualify for a larger mortgage, or understating income to gain a hardship discount or become eligible for a government subsidy.
►Liability fraud: Failing to list significant personal debts in an application, preventing lenders from accurately assessing borrowers’ ability to repay.
Arming against the octopus
When you consider the variety of ways mortgage lenders can be victimized by scammers and fraudsters, it is easy to see why traditional forms of fraud protection are proving inadequate for today’s tasks. Fighting this particular octopus means battling with all its various tentacles at once, thus allowing mortgage professionals who administer the process to recognize the signs of a swindle in the making.
Fortunately, technology has come to the rescue of an overburdened mortgage industry. Today’s professionals can draw on an unprecedented wealth of computerized customer data. Powerful software can mine this treasure trove to uncover more subtle trends in borrowers’ habits and backgrounds than ever before, revealing facts that previously wouldn’t have shown up on lenders’ radar screens.
One of the most important data tools at a fraud fighter’s disposal is quality control technology such as Undisclosed Debt Monitoring, a technology pioneered by Equifax. This service monitors a borrower’s credit activity during the “quiet period” from the moment the original credit file is pulled to the day a mortgage loan is closed. The popularity of this service has been spurred in part by Fannie Mae, which recommends that undisclosed debts be verified as part of its Loan Quality Initiative (LQI) guidelines. Freddie Mac makes the same recommendation as part of its Responsible Lending Guidelines.
Quality control technology automatically alerts a lender of any potentially risky activity or misrepresentation during the loan’s quiet period. Credit inquiries, tradelines or secondary reissues are immediately noted, and the lender is notified in a user-friendly report that makes quick, easy work of investigating any discrepancies. The quality control technology is also a discreet and effective way of determining which of your customers are “shopping around” with other mortgage loan providers. Salespeople can use an alert as a sign that the borrower needs more personalized attention and added reassurance that your company’s offer is worth accepting.
Borrowers can benefit from quality control technology as much as lenders can. A borrower in the mortgage origination process may unwittingly get a new piece of furniture or take out an additional credit card, changing their debt-to-income ratio and jeopardizing the loan closing. The borrower’s loan officer is immediately notified of the change, affording them plenty of time to work with the borrower to clear up credit issues and close the mortgage loan on schedule.
Quality control technology is only one of the many technologies available to make the mortgage loan origination process smoother and more free from fraud. A few of the other valuable mortgage fraud prevention tools include:
►Tax Return Verifications: A variety of service providers have developed ways to improve the otherwise cumbersome and slow process of comparing the tax returns a borrower submits with the actual data on file at the IRS. Tax Return Verification technology instantly highlights any items a borrower has failed to disclose, including self-employment income and non-reimbursed business expenses. As a time-saving bonus, it also allows the underwriter to complete a cash flow analysis using reliable, IRS validated data. In addition to verifying a borrower’s income, Tax Return Verification confirms a borrower’s Social Security number by comparing it to the correct SSN on the original tax forms. If the two numbers don’t match, it’s time to start asking questions.
►Identity Validation: Addresses the 60 percent of mortgage fraud that involves identification discrepancies. It provides a validation score, specific warning messages, household income estimates, and checks of watch lists.
►Social Security Number (SSN) Verification: Establishes the legitimacy of the applicant’s SSN and name combination, along with confirmation that the SSN and name are not on the Social Security Association death master list. This tool meets Fannie Mae LQI requirements.
►Mortgage Participant Report: Applicants are automatically checked against industry watch lists (OFAC-SDN, GSA-EPLS, HUD-LDP, and appraiser license data.)
Taming the beast with red flags
While the availability of such powerful tools is heartening, it can also be a challenge. Mortgage professionals are already overburdened with the tasks of seeking new clients and managing the flurry of loan paperwork necessary in today’s transactions. It’s tough to juggle all the elements of the normal origination process while simultaneously implementing a matrix of independent fraud tests, then cobbling together the results into a coherent picture of a client’s credit worthiness. This already murky picture is being further clouded by the identity fraud detection mandates of the Federal Trade Commission (FTC) under its Red Flags Rule, instituted in 2011. The Rule requires financial institutions and creditors to implement a written program to detect the warning signs of identity theft, and requires lenders to systematically incorporate the elements of the prevention program into their daily operations.
“Quality control technology automatically alerts a lender of any potentially risky activity or misrepresentation during the loan’s quiet period.”
Clearly, this mandate presents a challenge to mortgage industry professionals. Sensing an opportunity, the credit reporting industry has responded with a new generation of products that package a set of Red Flag identity theft instruments into a form that makes implementation easier.
If you ask any successful mortgage professional about industry trends, you will get an earful about a loan origination process that is already too complicated and growing more unwieldy every day.
Lenders need to welcome a new set of solutions. This set of solutions should ideally prevent them from getting wrapped up in the tentacles of a fraud detection regimen that drowns them with paperwork, while also having a monstrously significant impact on their customer relationships and their company’s profitability.

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