Sad to say, fraudsters are creative and energetic. If you’re in the mortgage industry, you need to stay on top of what they’re up to – and what they’re planning next.
Freddie Mac Single-Family Fraud Risk (SFFR) recently investigated and identified a new twist on misrepresentation. While an initial tip to SFFR implied potentially fabricated income and employment information in two loan files involving one loan officer, they received a second tip shortly thereafter that revealed more to the story.
A Multi-Layered Scheme
This second tip came from a different lender that reported loans originated by multiple retail loan officers. These loan files contained fabricated income and employment information, including some of the same questionable employers included in the initial tip.
Through standard monitoring of the loan production process, the lender suspected the same person was calling into the lender’s call center and posing as borrowers when applying for their loan.
Both the lender and SFFR suspected that there were multiple layers to this scheme beyond just information misrepresentation.
Phantom Employers
When Freddie Mac’s investigator contacted the loan officer referenced in the first tip, he produced emails that indicated that borrowers sent his office their income documentation via email.
The investigator believed that these email accounts merely gave the appearance that they belonged to the borrowers but were actually created by a third party to facilitate this scheme.
In reviewing the employment information in the loan files, the investigator also discovered that, while many of the businesses had active websites or other online footprints, the businesses themselves couldn’t be located. Through his research and by conducting fieldwork, the investigator discovered the reason was that those businesses didn’t exist.
Borrower Roadblocks
SFFR interviewed several of the borrowers whose loans were tied to the second tip.
They acknowledged that their loan files contained false income and employment information and that the phone numbers listed on the application were not theirs.
However, the borrowers didn’t seem particularly surprised or alarmed – perhaps because they were aware of the discrepancies in the first place.
Additionally, the borrowers said they didn’t recognize the name of the loan officer listed on the application and were unable or unwilling to provide the name of the person who they worked with to get their loan.
If the borrowers interviewed were being cagey about whether they knew the loan officer’s identity, the investigation still confirmed that there was no evidence on the settlement statements or closing disclosures that they paid a third party to impersonate them to qualify them for their loans.
An additional layer of suspicion was revealed through a discussion with the servicer. They confirmed that, after closing, the borrowers’ contact information was updated to include different email addresses and phone numbers – ostensibly their actual contact information.
They’re Not Who They Say They Are
Making up income and employment information is one thing, but it’s a bold new twist on an old fraud scheme to impersonate an applicant when applying for a loan.
In pretending to be the borrowers when calling the lender’s call center and providing false contact information, a third party was trying to control the process from start to finish. And this impersonation violates a basic norm of loan origination and underwriting.
Through the investigation, it became evident that the borrowers would not have qualified for a loan without the third party fabricating their income and employment information and taking it a step further by misrepresenting their identities.
