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April 02, 2015

Lender Checklists for Fighting Mortgage Fraud

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Detecting and Stopping Mortgage Fraud

If mortgage application volumes rise, as they are widely expected to this spring, so will the industry's challenge to flag potential fraud without causing unnecessary delays to new business. In addition to the checklists for a spring quality control tune up from Freddie Mac VP Single Family Quality Control Chris Mock, Freddie Mac encourages lenders to take a fresh look at their process for detecting and stopping mortgage fraud.  It's basically a two-step process:

  1. Review current fraud controls to ensure they detect the latest scams, including the ones most likely to turn up as the spring homebuying season takes off. Keep an eye out for:
    • Misrepresentations of information about the borrower, the property (inflated property valuations), and other material facts in the loan application.
    • Red flags on the HUD-1. Some of the most common flags include excessive payouts, particularly to unknown parties. (Such parties are usually the ones profiting from a fraud scheme.)
    • Straw buyers with good credit who are used by fraudsters to hide the identity of a different borrower.
  2. Download free copies of Freddie Mac's latest  fraud screening checklists:
  3. Monitor Freddie Mac's Fraud Prevention Resources page for alerts and information to help our customers keep loan quality high and mortgage fraud risk low. Make it part of your regular quality control checklist.

If you have questions about mortgage fraud, or suspect mortgage fraud on a Freddie Mac loan, call 1-800-4FRAUD8 or write to mortgage_fraud_reporting@freddiemac.com.

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