As a mortgage professional, you are probably aware of the significant rise of fraud in our industry. As technology improves, mortgage fraudsters become more and more savvy. In your role as a processor, you are the first line of defense against fraud. To survive in the business for the long haul, you will need to learn to identify the patterns of fraud. In-house processors should be aware of their company policy regarding fraudulent activity. Contract processor should have adequate checkpoints in place to avoid being victimized by one of the fraud rings that operate throughout the country.
If you process loans in a state that has been designated as a fraud “hot spot” by the FBI, you should definitely be more observant (see Nov. 2004 newsletter). Fraud Prevention Training will arm you with the tools that you need. In the meantime, being aware of the Red Flags below will help you to protect your business and your reputation:
-- The applicant’s earnings are not realistic for the job position and tenure -- Repeated revisions to the employment and income data on the 1003 -- The applicant’s credit profile is not consistent with reported income and assets -- The credit report reveals that the social security number is invalid -- An independent verification of employer information reveals inconsistencies -- Credit explanation are not consistent with credit report data -- Pay stubs with calculation errors -- W-2s showing earnings and tax withholdings all ending in zeros -- Tax returns showing significant income with few deductions -- The hire date on the VOE occurred on a weekend or holiday -- Significant overdrafts showing on bank statements -- An appraisal report completed in advance of the purchase contract -- An appraisal report missing owner, seller, or occupant information -- An appraisal showing a high value in a declining area -- The name of the seller or current owner does not appear on title -- Zero cash due from the buyer although the loan is not 100% LTV
In addition to being on the lookout for these things, let it be known that you have zero tolerance for fraudulent loan submissions. Terminate your relationship with any originators who continue to test the waters. ------------- INDUSTRY NEWS BRIEF
Citibank recently introduced its new two-in-one home loan product to its Malaysia market. The product combines a standard home loan with a housing loan account. It is expected to appeal to the masses because it will provide additional cash flow control. The amount deposited to the account above the monthly loan payment can be accessed by the borrower via an ATM card or checks. The accounts will earn interest and there is no penalty for withdrawals.
------------------- QUESTION OF THE MONTH
Q. I am an experienced loan officer who does not have the time (or desire) to process my own loans. How can I choose a good processor?
A. That’s a great question. We recommend that you conduct one or more interviews with your prospect. During that interview, try to get a feel for whether or not this individual will be able to work well within your existing structure. The processor should also be able to bring some new ideas to the table. Here are a few other suggestions for the interview(s):
1. Find out what lender and loan types the processor is familiar with 2. Inquire about his/her average monthly production 3. Select a challenging file scenario and find out how the processor would handle it 4. Find out what the processor’s expectations are 5. Communicate your expectations 6. Discuss the compensation plan, benefits, and work hours 7. Review any situations that are unique to your office or clients
You can also download a free copy of our special reports entitled Five Characteristics of a Dynamic Processor and Ten Things a Mortgage Processor Must Know to be Effective.
-------------- COMING SOON…Click-n-Learn Online™ Audio Workshops Visit our website at www.completemortgageprocessing.com Or www.processinghelp.com
