Mortgage Fraud

Today, the FBI and mortgage industry professionals believe 10-15% of all loan applications contain material misrepresentations, i.e. fraud. Many times these fraudulent loans end up in foreclosure resulting in financial losses to mortgage lenders. Unfortunately, many lenders recoup these financial losses from the public by increasing the cost of loans. Fraud hurts everyone. Fraudulent loans only exacerbated the lenders problems. Many times fraudulent foreclosed loans resulted in substantial losses. An example could have been a loan officer who fabricated pay stubs to help a borrower qualify for the loan -- insuring the loan officer collected his commission. Another example could have involved a borrower who submitted falsified tax returns. GAPS investigators researched files for misrepresentation and provided lenders the evidence needed to proceed with civil and/or criminal filings against the perpetrators. So the next time you or a friend applies for a loan, be forewarned: misrepresenting information on a mortgage loan application is illegal. Your information may well be reviewed by AEGIS (TM). If a lender detects misrepresentation, federal law provides for those convicted of loan fraud to receive a possible 30-year sentence and up to $1 million in fines! SOURCE: Robert J. Sadler, GAPS/AEGIS (TM).

Last time, I wrote about the false sexual harassment allegations made against my friend "John". Well, it turns out there is a lot more to the story. John works as an underwriter for a lender in the non-conforming loan business. This lender receives its loan applications (via company sales personnel) from licensed brokers across the country. His job is to review all credit, income and collateral documents that are used to qualify a borrower for a mortgage loan. In the first few months of his new job, John was given extensive training by his supervisor much like an apprentice gets feedback as he hones his knowledge, skills and abilities. Ocassionally, John would discover fraudulent income documents and immediately report this to his supervisor. Surprisingly, the supervisor would handle it in a somewhat cavalier manner. He would simply instruct John to hand the file back to the salesperson. John never saw the file again. At the time, this did not appear odd to John as he was new at the company and was not educated yet about the company culture. All that changed the day John received the sexual harassment email from his supervisor.

After recovering from the sting of such a false allegation, John began to wonder why and who would make such a libelous and slanderous charge. What was their modus operandi? Well, it didn't take long for John to put "two and two together" or shall I say "one and one together". A few weeks after receiving the email, John was informed by a trusted contact that his accuser had accidently blabbed over drinks of what she had done. His accuser was not the woman his supervisor had hinted at but rather someone who had much to gain by seeing John removed. After all, it was mostly her loans that contained fraud. This woman contributes well over a quarter of the entire sales team's loans each month bringing her very large commissions The supervisor for her and John receives a very large commission each month as well. John earns a straight salary. Who has the competitive political advantage? Or better yet, who has the most to lose? What are John's options? Should he continue to work for this company? Should he report any further fraud from his accuser? Can John trust his supervisor? How far up the corporate ladder does the corruption go? Should John contact the Federal Bureau of Investigation and/or Homeland Security? If John does nothing, can he be considered an accessory after the fact? What should John do?