The following is an excerpt from the August edition of Mortgage Technology magazine. To read the full story and much more,
Ann Fulmer first encountered the negative consequences of mortgage fraud when a property-flipping scheme ran rampant in her suburban Atlanta neighborhood. She took the fraudsters on, using her experience as an attorney to investigate and root out mortgage fraud.
She is now vice president of industry relations at Interthinx. Her role includes developing tools for the Agoura Hills, Calif.-based company’s risk management and fraud detection services and technology, as well as training law enforcement and regulatory agencies how to detect mortgage fraud and build cases against criminals.
MT: How would you categorize the state of mortgage fraud in America?
Fulmer: When you look at our Fraud Risk Index, the overall level is down by approximately 30% from the peak, and that’s my perception, too. We’re doing better because we’ve closed off a lot of opportunities for the most egregious fraud like stated income, no doc loans and things like that. Lenders have also improved their processes. Instead of just putting a 4506-T in the file, they’re actually using it to verify income.
That’s good, but the problem is it’s a cat-and-mouse game. Dealing with fraud is like a balloon—if you squeeze one place, it will pop out in another. Since we don’t have no-doc programs anymore, we are now seeing more forged documentation.
MT: How has the use of technology evolved in the fight against mortgage fraud?
Fulmer: The fraudsters have always used technology to their advantage, whether by finding people online to be straw buyers or fabricating documents.
Technology is a double-edge sword. Clearly, technology has to be part of the solution for several reasons. Technology allows fraudsters to make absolutely picture perfect forgeries. When you look at a document, you don’t see what you saw in the old days, the Wite-Out or the letters squeezed in because somebody is typing over a bank statement to add a zero to the balance. You get documents that you absolutely cannot tell are forgeries.
Technology is a way for lenders to very efficiently and quickly assess the voracity of the information that it contains. You go beyond the look and into the actual substance of the documents.
MT: What are some of the new ways fraudsters are using technology to commit their crimes...
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