Once mortgage fraudsters find a chink in a lender's armor, they not only zero in on it, but they also pass it around to their fellow thieves, speakers at a conference in Las Vegas said.
"If it gets known" that a lender isn't doing the proper due diligence, con artists "will be coming at you," Jay Meadows, the founder of Rapid Reporting, said at the Global Technology Summit at the Hard Rock Hotel.
"Criminals know what you are doing, what your companies are running," he told a group of about 150 appraisers, lenders and other industry professionals. "They know better than you do."
Michael Richardson, president of BrokerPriceOpinion.com, said that while the schemes designed to separate lenders from their funds "haven't changed much," the con artists "have gotten better at them." Worse, he added, the scamsters tend "to prey on the weak."
The two-day conference is being sponsored by Global DMS, a Lancaster, Pa.-based appraisal management software firm.
Meadows, who sold his firm to Equifax 18 months ago, said that for the most part, lenders are "doing a better job" of combating fraud than they were when he started the company in the mid-1990s.
Back then, he told the meeting, he was part Zig Ziggler, part Billy Graham, selling his services and "evangelizing" about the need to stop fraud at the source, before the loan is funded. But while lenders have come a long way since then in their efforts to combat fraud, he added, they still have a ways to go.
"Even with all the technology that's available," he said, lenders "have to be careful and have to get involved. And it takes not just a company commitment but an industry commitment."
In some cases, Meadows said, lenders who are being asked to modify a loan are relying on employment and income information submitted when the borrower originally applied for the mortgage. And that could have been years ago.
In such cases, lenders "are throwing good money after bad," he said, adding that underwriting "is really a waste of effort. In three months, the borrower is just going to default again."
Richardson reported that he's heard of instances where thieves are offering to buy brokers' NMLS numbers. And Meadows said that if they can't buy someone's ID, they'll steal it, usually from an appraiser.
