Tag Archives: Fraud

Servicers have been ordered to institute a clear resolution process for consumer complaints. Accountability when it comes to dealing with distressed borrowers has become a central focus of mortgage servicing reform, but an audit conducted by the Federal Housing Finance Agency's inspector general found that the GSEs' regulator is itself lacking in this area. The report says the agency has let complaints alleging fraud, abuse, and improper foreclosures slip through the cracks with no oversight of their resolution. FHFA says it will take actions to remedy the issue.

As it peels back the layers of the secondary market to delve deeper into the trading of the subprime mortgage bonds reputed for setting off the financial crisis, the Securities and Exchange Commission (SEC) has set its sights on major credit ratings agencies. The SEC is considering bringing civil fraud charges against Standard & Poor's and Moody's Investors Service for their role in positioning mortgage-backed securities that held a high risk of default as grade-A investments.

Nearly one-quarter of calls from homeowners who believe they are victims of a foreclosure rescue scam originate in California, according to statistics released by the Homeownership Preservation Foundation (HPF), which operates a national hotline to direct homeowners to accredited counseling services. While California's reported fraudulent activity was significantly higher than other states, only Los Angeles ranked in the top five cities, indicating that purported scam activity isn't concentrated in any one area of the state.

Interthinx has released its quarterly Mortgage Fraud Risk Report covering data collected during the first three months of this year. The company found that the geographic distribution of fraud risk has ""evened out"" since its last study as faltering market conditions across the country have enticed fraudsters to try their hand. Despite a decline in its index reading, Nevada remains the state most at-risk for mortgage fraud. Wyoming, South Dakota, Connecticut, and Hawaii were reported to have the largest increases in fraud risk.

Four senators have drafted a letter they intend to send to key policymakers advocating for the return of federal dollars to HUD's housing counselor program. Congress eliminated funding slated for the federal program, which supports counseling efforts for foreclosure prevention, back in April as part of the 2011 budget resolution. Sens. Akaka, Menendez, Snowe, and Rockefeller are asking that $87.5 million be included in the 2012 budget to fund the HUD program, and they're soliciting their Senate colleagues for additional support.

With millions falling behind on their mortgage payments and declining property values eating away at home equity, short sales are increasingly being looked to as an alternative to foreclosure. CoreLogic says the number of short sales has tripled in the last two years, and they're expected to increase another 25 percent in 2011. Such growth, though, can open the gate for fraudulent activity. CoreLogic estimates lenders, servicers, and investors may incur potential losses in excess of $375 million this year from ""suspicious"" short sales.

California Attorney General Kamala Harris announced the creation of a 25-person task force on Monday charged with protecting homeowners from mortgage fraud. Within the last year, the California Department of Justice says it has received thousands of complaints related to foreclosure scams and mortgage servicing practices. In addition to fraud on the default side of the business, the task force will be on the lookout for misconduct and false claims involving investments and securities tied to subprime mortgages.

Interthinx, a provider of risk mitigation solutions, recently integrated business search and bankruptcy data within its FraudGUARD system to help lenders identify high-risk borrowers. According to the company, the changes ensure a more concise borrower risk review, can improve loan quality, and provide users with a fraud prevention report.

The first three months of 2011 saw a 44 percent increase in the volume of mortgage fraud case activity, according to industry data released this week. The cases reported represent fraud on an estimated $1.2 billion in real estate loans, rising from $0.9 billion in the final period of last year. The report notes that loan repurchases are largely responsible for the increase, with smaller firms forced to buy back loans from housing agencies or correspondent lenders conducting their own investigations and uncovering more fraudulent activity.

Ohio Attorney General Mike DeWine has filed a lawsuit against The Modification Group LLC, a Cleveland business that offered to help homeowners avoid foreclosure in exchange for upfront fees. The lawsuit alleges multiple violations of Ohio consumer law, including failure to deliver. The attorney general's office currently has 70 complaints against the company dating back to December 2009. DeWine is seeking civil penalties and full restitution for consumers.