Smart Bankers Avoid Mortgage Fraud
But one thing I do know is something that smart bankers already understand: Know who you're doing business with before you write a mortgage. Check out this mortgage fraud case, this time in (Broward County, Florida). I don't know many institutions that would want to have a $10 million loss on their books, especially during these economic hard times. These seven defendants came in with false paperwork, from the loan application to employment verification forms, salary information and even false bank account statements.
Institutions that offer mortgages should expect more regulatory scrutiny in this area, and don't just sit there and think that, well, it's only happening in California, Florida, Texas and a couple of heavily-populated states like New Jersey. Mortgage fraud is happening everywhere, and based on current FinCEN SARs numbers and FBI statistics, it's going to be a continuing problem, even with the increased regulatory scrutiny of financial institutions under the ID Theft Red Flags rule.
Mortgage fraud is happening everywhere and based on current FinCEN SARs numbers and FBI statistics it's going to be a continuing problem, even with the increased regulatory scrutiny of financial institutions under the ID Theft Red Flags rule.
The "Know Your Customer" or KYC rule -- if that's not enough to get you awakened, the fact that a glut of foreclosures are creating a problem for banks holding those mortgages should also be your sign. Smart bankers don't get burned by charlatan mortgage brokers who put up a sign and go to business. They double check paperwork and identities.
Remember, know who you're doing business with, from the buyer to the broker to the mortgage broker to the appraiser. Knowing your institution's community and the economics of the area are also key factors in keeping fraud from entering your institution. Questions beforehand and some of that good smart grey matter being used to assess the situation will keep your institution's loan portfolio clean of any mud.