Know How to Spot Mortgage Fraud
December 10, 2015
Private and government analysts estimate mortgage fraud costs the industry and borrowers tens of billions of dollars a year. Just one incident of fraud alone can cost a median of $145,000, according to estimates from the Association of Certified Fraud Examiners.
At Freddie Mac, we provide useful resources to help both lenders and borrowers recognize and avoid fraud. Our Freddie Mac Financial Fraud Investigation Unit (FFIU) works across the country with law enforcement to probe suspicious activities, gather evidence and work with prosecutors to bring fraudsters to justice.
You can alert your customers to potential sources of mortgage fraud, which could include:
- Solicitations by self-proclaimed "specialists" who demand advanced fees to:
- Replace a borrower's current credit history in an attempt to make them a stronger candidate for a new mortgage—purportedly through a higher credit score or a new credit reputation.
- Get a lender to modify, refinance or reinstate the borrower's mortgage.
- Stop a foreclosure by renting the borrower's house back to them after the owner turns over their deed to the so-called "specialist."
- Pressure to sign any paperwork that borrowers haven't had a chance to read or that they may not fully understand.
- A company/person your borrower doesn't know asking to release personal financial information online or over the phone.
Freddie Mac investigators rely on tips from lenders, servicers, consumers, law enforcement officials and others to help identify and penalize fraudsters.
You are critical to stopping mortgage fraud. If you observe potential fraud:
- Send an email to Freddie Mac's Financial Fraud Investigation Unit at firstname.lastname@example.org.
- Call Freddie Mac's Fraud Hotline at 1-800-4FRAUD8 (1-800-437-2838).
- See our Mortgage Fraud Web page to learn about our mortgage fraud prevention efforts.
- Read the November 5, 2015 Single-Family News article, "Combating Mortgage Fraud Aimed at Falsely Raising Credit Scores," here.
Resources for Your Borrowers
Here are helpful resources you can share with your potential borrowers: