Putting a face on mortgage fraud

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) September 16, 2009 -- I am a private investigator licensed by the Arizona Department of Public Safety AZPi 1551860. Much of my working life has been in the financial recovery field and it seems natural that I have been tapped to represent private mortgage insurance companies (PMI) regarding claims filed by mortgage companies.

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Putting a face on mortgage fraud

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Of course I am involved when the loan goes into default and the home if foreclosed. As a condition of obtaining the loan the mortgage company may have requested that PMI insurance is purchased. Perhaps the borrower's credit score was too low, it could be for several different reasons. When the loan goes into default, the mortgage company will ask my client to pay a portion of the loan.

In today's environment there is no lack for work for me. On average I see four to five cases a week sometimes more. Of those cases eighty five to ninety percent I receive have what I describe as questionable activity. I choose not to say fraud because it is up to a judge and jury to convict. Everyone is innocent till proven guilty.

The cases I receive come from an insurance company and as such an adjuster will look at a claim to make sure there is nothing unusual, just as they should. Most of the time unusual items stand out pretty quickly, for example it may not be reasonable for a lawn care person to earn $5,000.00 a month. There is a standard for occupations and if they don't fit a flag will be raised.

It should be known that I have no part in denying or approving a claim. I only verify the facts and report those facts to the client. None of my clients have ever asked me to find a probable cause to turn a claim down and once the report leaves my office I never know what happens to the claim.

There is certainly sociology to mortgage fraud. In an attempt to put a face on the crime I submit the facts on a case I worked today.

The subject in the case is a single 40 year old divorced female Mormon with three children. The mortgage application was for $280,000.00 and based upon an income of $5,500.00 a month. She reported on the October 2006 application that she had worked for her employer as an office manager for 2 ½ years.

When I received the file it had two applications, one listed the income as $3,500.00 a month with $1,500.00 a month in child support. The approved application listed the income for the employer as $5,500.00 a month. This would be a flag. Two different applications with different amounts and the job title not fitting the income norm.

My task was to determine if the income was as stated. Some of the methods of doing so it to locate the subject and request they sign a document that will allow the client to pull tax returns. The other is for me to interview the employer and have them fill out a verification of employment form.

Many times part of the loan process begins with a loan originator or loan broker. As part of their responsibilities the originator must verify the employment information on the loan application. In this case a document was in the file suggesting that the broker called the employer and confirmed the subject had worked there since 2004. There was no verification of income.

It should by now be evident to many that part of the creativity of mortgage loans included no document or stated loans, meaning the borrower does not have to provide pay stubs, tax records or anything else to prove income.

As I reviewed the file I noticed in the data bases another piece of property owned by the subject at one point. According to the deed of trust in the recorders office a quit claim deed was filed just prior to the purchase of the subject property with that property being transferred to what could be presumed a husband or soon to be ex-husband. The data bases reflected a recent change of last name for the subject so it was presumed a divorce occurred thus causing the subject for find separate housing for herself and 3 children

A check with the Maricopa County Superior Family Courts showed that indeed a divorce was filed just prior to the purchase of the property. It was a divorce with children. What that means is financial statements from both parties must be provided in the form of a sworn affidavit.

When I pulled the records from the courts I discovered that the subject listed her income for 2006 as $12, 845 and that she made $850.00 a month with the same employer that she claimed she made $5,500.00 a month. She also stated in the affidavit that she was employed from August of 2006 through January of 2007. She is now a stay at home mom with her three children and two step children. Her and her new husbands name is listed in the court file. Clearly there is a problem.

If I notice that there are unusual circumstances such as those mentioned above I look to see if the loan originator helped with this creativity. It happens a great deal. I have seen brokers create jobs, identifications, tax records and straw buyers to get the deal done. Some of these cases have been indicted by the FBI and Attorney General.

In this case I plugged in the name of the new husband and saw he was a licensed realtor. The Arizona Department of Real Estate had had a complete listing of the companies he had worked for.

After a review of the loan documents I saw in the HUD settlement report that a sales commission was going to the very company he was employed with. Upon further review of the documents I noticed his name at the top of a counter offer. The document came from his fax machine.

I placed a call to the realtor managing broker and asked that they pull the files for the sale to ascertain if the new husband was the sales agent. The answer was yes. The commission on the sale was $8.460.00. Data bases records reflected he was residing at the same property as the subject. Court records show that he too divorced at the same time as the subject.

I then placed a call to the employer of record and spoke to the person that was allegedly interviewed by the loan originator. The employer had no recollection of the call but could say that the earnings information the subject listed on the application was not accurate nor was the length of employment. The employer told me that if a call from the loan originator had come in, it would have been answered by the subject.

A further check of court records reflect that a writ of replevins has been filed by a major auto finance company looking to repossess the auto of the new husband. I have to wonder how much he claimed he earned on the application.

This weekend I will show up in the neighborhood of the subject house and show neighbors the photo I pulled from The Department of Motor Vehicles to ensure that the subject did indeed live there and the property was not used as a rental unit. The picture is of a blond blue eyed woman with a very engaging smile.

$280,000.00 has disappeared in a puff of smoke. I might presume the PMI company will deny the claim based upon the evidence. The mortgage company will take the loss along with the American tax payers who bailed the mortgage company out.

The loan originator is no longer in business and has very public legal battles going on right now. I know this because I have had to look at them for creative assistance they provided borrowers in past cases.

If you are in the real estate or lending industry, take heed to this story. The face of mortgage fraud could be anyone and I will find out. There are no secrets.

John Brewington Pi, C.P.S.B.I. is the managing member of Paladin Investigations based out of Chandler, Arizona. John has achieved the designation of Certified Pre-Employment Screening and Background Investigations Specialist. He can be reached at 877-290-7379

More information can be found online at http://www.paladinpi.com

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