Loan Fraud Is Hot
There was a great article in “Origination News” all about fraud increasing in 2008. That is why it is more important than ever to do with someone that can be trusted. Many people go onto websites and read in the newspaper about rates. You have to be so careful with companies publishing rates that do not currently exist. You also need to make sure to read the fine print. Here is what 2 individuals said in the article:
“I think the losses are going to get a lot worse. I think we’re closing a chapter on the rampant mortgage fraud that was out there. We’re going to at least require people to falsify a W-2 and a pay stub, we’re not going to let them just slide it through. We’re not going to do it as foolishly as we did in the last five years. If you’re going to commit fraud now, you’re going to have to get creative on your Photoshop.
There will continue to be a high percentage of reported fraud as the market continues to constrict because we haven’t seen the losses come in from the 2005, 2006 and 2007 books and I think those are going to be fairly substantial. My only concern about the new market is that I don’t think that tightening underwriting policies doesn’t necessarily stop fraud. It stops a lot of the marginal deals, but there are fraudsters out there that have to do it for necessity, as opposed to opportunity.
The fraud rates we are seeing on applications for 2008 originations are increasing. They are going back up again and it is, as Merle said, because of desperation. You have borrowers who can’t sell, you have…”