Mortgage fraud

Scams in which a real person’s information is used to create fictitious businesses or individuals have led to $6 billion in credit losses. The Federal Reserve has developed a standard definition for synthetic identity fraud so lenders can distinguish it from traditional identity theft.

The individuals allegedly defrauded Freddie Mac and CBRE Capital Markets by misrepresenting information used to refinance a small-balance loan.

The defendants face 133 felony counts that include allegedly stealing identities to commit mortgage fraud between 2014 and 2020, resulting in the theft of $15 million.

The complaint exemplifies the Department of Housing and Urban Development’s focus on “fair servicing” in addition to fair lending.

Fannie Mae and Freddie Mac’s new limits on loans secured by investor properties and second homes may put pressure on applicants to misrepresent their occupancy status.

New entrants in the market may believe: “We’re doing everything right. Fraud isn’t a problem, and we have a fraud alert tool in place anyway.” This, of course, is exactly when fraud risk grows, warns Paul Harris of First American Data & Analytics.

While many lenders have verification processes and systems of record in place for their structured data, they lack digital solutions capable of addressing the volume of customer data from documents that create a broad area of vulnerability for them, writes Reggie Twigg, director of digital enterprise at ABBYY.

The rush to refinance led to more errors in January and the shift to more-risky purchase apps will add to lenders' fraud concerns going forward.

With extreme winter weather about to give way to ballooning insurance and mortgage forbearance claims in Texas, servicers will need to get through their pipelines with urgency while weeding out fraud.

The former executive at Lend America, who has remained out of prison since his 2011 guilty plea, will not be incarcerated for his acts.