Daily News and Information for the Mortgage Loan Originator
Mortgage Fraud Jumps by 45%
Wednesday, December 03, 2008
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RESTON, VA - Reported incidents of mortgage fraud in the U.S. increased by 45 percent on fewer loan applications in the second quarter of 2008 from a year ago, according to a new report released by the Mortgage Asset Research Institute (MARI), a LexisNexis service. The MARI Quarterly Fraud Report is based on data submitted by MARI subscribers on loans originated in the second quarter of this year that have since been classified as fraudulent.
Key findings from the MARI Quarterly Fraud Report include that fraud most often occurs at the beginning of the loan process. More than 65 percent of fraud incidents are attributed to "General Application Misrepresentation" -- a trend that has continued over the past two quarters. General Application Misrepresentation is when information such as when an incorrect name, occupancy or asset is potentially misrepresented during the application process. This fraud trend is followed closely by reported misrepresentations related to "Income" at 36 percent of Q2 applications and "Employment" at 20 percent of Q2 applications. The MARI Quarterly Fraud Report is available on MARI's Web site. Quarterly Fraud Report are three observations to help combat fraud, including:
Mortgage organizations need better technology tools to evaluate applications;
More collaboration is needed between mortgage organizations; and
Mortgage organizations need to stop suspicious loan applications at the beginning before they go into the origination stage -- the stage where most of the fraud occurs.
MARI provides valuable industry insight derived from its Mortgage Industry Data Exchange (MIDEX) database, which contains an aggregation of 18 years of historical reported incidents of fraud and verified misrepresentations submitted by leading mortgage industry participants. MARI analyzes this industry data and presents reports that depict a national composition of residential mortgage fraud and misrepresentation to support the industry's effort in the fight against mortgage fraud.
In addition to aggregate fraud, the quarterly report tracks fraud at the state level. For example, for two consecutive quarters, Florida leads all states in reported mortgage fraud, followed by California and Illinois, respectively.
Mortgage Company Owner Pleads Guilty in $33 Million Fraud Scheme Vijay K. Taneja, age 47, pleaded guilty to one count of conspiracy to commit money laundering in connection with a mortgage fraud scheme involving his company, Financial Mortgage, Inc. Taneja admitted to using an intricate scheme to defraud consumers and warehouse lenders including First Tennessee Bank, Franklin Bank, Wells Fargo Bank, and EMC Mortgage Corporation, which amounted to over a $33 million loss for those defrauded.
One $367,500 Loan Gets Broker One Year Home Detention A mortgage broker was sentenced to 12 months of home confinement as part of a five-year term of probation for his guilty plea to a charge of bank fraud in connection with a single $367,500 loan he originated.
Operation Malicious Mortgage Defendants Sentenced Two defendants involved in a mortgage fraud scheme that yielded $6 million were sentenced this week. While the third defendant that originated the majority of fraudulent loans for the pair is awaiting sentencing.
Four Charged in International Conspiracy Ring Four men in three states are charged with engaging in a multi-national identity theft ring that operates in the United States, the United Kingdom, Canada, China, Japan, Vietnam, and South Korea, among other places. These men conspired to depleted funds available in home equity lines via fraudulent wire transfers or by acquiring unauthorized access to the victims' on-line bank accounts.
27 Arrests, 9 Indictments in Ongoing Fraud Probe 27 suspects thus far have been arrested during an ongoing investigation of mortgage fraud by a local district attorney. Included in the arrests were mortgage brokers John Tuozzo and Steven Winick, as well as a Citibank employee, Yvonne Rojas who allegedly provided phony verifications of bank balances, to get Tuozzo and Winick's clients qualified. Rojas has been accused of being involved in 96 fraudulent mortgage schemes and the issuance of false verifications of deposit for over a dozen different mortgage brokers.
Restraining Order Filed Against Mortgage Broker David Coleman, a mortgage broker who allegedly preyed upon financially distressed homeowners by representing himself to be an attorney and a bankruptcy expert who claimed he could save consumers' homes from foreclosure was issued a temporary restraining order, to stop the alleged illegal practice.
Investor Fudges Credit Scores in $66 Million Fraud Steve Gordon has been accused of allegedly changed credit scores on at least 2,800 mortgages before selling them to investors, as part of a $66 million fraud scheme. Gordon was a partner at wholesale mortgage investor, Bayview Financial. Watch the video.
