Freddie Mac warns of fake school records in growing mortgage fraud
Freddie Mac uncovered a growing number of fraudulent school records and work histories in California, where Fannie Mae also has noted increasing instances of falsified employment information.
"We're seeing an increase in false claims of higher education," an unnamed Freddie Mac investigator said in a recent report the government-sponsored enterprise posted online.
In one instance, the concern was traced back to a loan processor at a now-shuttered brokerage with a prior conviction for wire fraud conspiracy, according to the government-sponsored enterprise's report.
An unnamed mortgage company selling loans to Freddie Mac reportedly uncovered the concern after finding it suspicious that two mortgages originated by the same loan officer had very similar borrower profiles.
The Freddie Mac investigator subsequently uncovered many more instances of falsified college records, and recommends underwriters double-check submitted information.
"Underwriters often don't think they can contact a college or university to verify attendance and/or graduation dates. It's a simple step toward confirming that a borrower truly graduated. If an institution has a policy against sharing this information it will let you know," Freddie Mac said in the report.
Fannie Mae warned lenders last year that it had uncovered a growing number of California loan files with false borrower information in them related to employment. Many of these borrowers recently listed their prior job as "student," and many of the loans were originated by third parties.
Investigators found signs of fraud in more than 50 Fannie Mae loans last year, down from more than 150 the previous year, according to the GSE's recent fact sheet on fraud trends. The percentage of fraudulent loans with fabricated or inflated income or employment data fell 6 percentage points to 39% in 2018, which suggests that the incidence of this type of fraud is slightly lower but remains unusually high.