Mortgage bankers converged in Washington, D.C., last week to discuss the growing threat of fraud in the industry and strategize about how to combat it.
Participants in Thursday’s summit, Protecting the Real Estate Finance System: Combating Mortgage Fraud Against Lenders,” were a cross-section of industry players, according to a Mortgage Bankers Association announcement.
The panel of speakers included Regina Lowrie, MBA chairwoman-elect and chief executive of Gateway Funding Diversified Mortgage Services; Chris Swecker, FBI director of the criminal investigative; and Ann Fulmer, president of the Georgia Real Estate Fraud Prevention & Awareness Coalition.
“Concern about mortgage fraud against our home finance industry has reached such heightened levels that top management of every lender has to decide how they are going to address this growing threat and protect their company, their employees’ jobs and the borrowers they serve,” Lowrie said.
Fraud against lenders, which Fulmer described as “bank robbery without a gun,” ranges from property flipping schemes that deteriorate neighborhoods to debt elimination scams that tarnish family finances and the reliability of public records, the announcement said.
One “national mortgage elimination scheme” recently unveiled by the Better Business Bureau was that operated by Dorean Group. The California-based company reportedly persuaded borrowers that eliminating mortgage debt is legal and ethical by telling them the banking system is flawed. Upon charging a $3,000 fee, the group helped wipe out the mortgage by having borrowers convey the title to their homes to a trust through quitclaim deeds, which named Dorean officials as trustees. The borrower’s lender was then presented with a document outlining numerous “violations” of federal laws committed by the lender. When the lender failed to respond with proof of the validity of the loan within the allowable time frame, a power of attorney was filed to give the trustees authority to act on behalf of the lender and file a “Discharge of Mortgage” to certify the loan as fulfilled.
“To some, mortgage fraud may be something they see on a profit and loss statement, but to me, it’s my children, my family, my friends and my community,” Fulmer added. “When flipping schemes moved into my neighborhood, we witnessed an increase in violence, increased property assessment taxes and a deterioration of the quality of the neighborhood. I believe we all have a responsibility to protect our communities and neighborhoods by finding ways to cooperate and share information in order to fight this battle.”
Summit participants gathered into four groups to develop recommendations to combat the problem. Key suggestions included: “explore the feasibility of sharing corporate policies, practices and information in furtherance of the development of “best practices” for the detection and prevention of mortgage fraud; advocating for more federal and state resources that would be devoted to investigating and prosecuting mortgage fraud; educating mortgage lenders and law enforcement to the needs each has in pursuing mortgage fraud investigations; and developing initiatives to increase the accessibility of public records for use by mortgage lenders and fraud prevention service providers in combating mortgage fraud,” according to the announcement.
“It is vital that policy makers, law enforcement and the public understand the reality and magnitude of the problem and work together to address this issue,” Swecker said in the announcement. “Prevention of mortgage fraud should be our collective goal.”
Fulmer told MortgageDaily.com she was “incredibly gratified with the level of support” the summit received from industry players, as concentrating efforts is the best way to drive out an issue that is increasingly affecting “the flesh and blood of communities.”
“The bad guys have the advantage right now, since they work together like an octopus with many tentacles,” Fulmer said in her prepared speech. “The good guys are like an octopus with lots of arms, but there is little communication or coordination between the arms. We have no chance of stopping fraud unless we can find ways to share what we know and to work cooperatively.”
