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New Resource and Updated Requirements Help Protect Your Servicing Organization from Mortgage Fraud

December 7, 2011

You are carefully reviewing a borrower's workout package and their reported income seems suspicious to you. Or, you notice an unauthorized fee in a HUD-1 Settlement Statement. What you may be witnessing in these situations are variations of different mortgage fraud schemes that can impact your servicing organization.

Strong fraud prevention and detection practices are an integral part of responsible servicing that help ensure the success of Seller/Servicers and borrowers throughout the life of the mortgage. For any servicing organization, today's fraud schemes can be hard to identify. To help with the identification and prevention of fraud, we created a new fraud prevention resource for Servicers and enhanced our short sale affidavit Single-Family Seller/Servicer Guide (Guide) requirements.

New Preventing Mortgage Fraud for Servicers Fact Sheet Now Available

We recently updated our collection of fraud prevention resources with a new Preventing Mortgage Fraud for Servicers fact sheet. Available on our Fraud Prevention Resources Web page, the new fact sheet offers servicing organizations:

  • Valuable information on Freddie Mac's fraud reporting requirements.
  • Details on common mortgage fraud schemes, including borrower misrepresentations and short sale fraud.
  • Important tips to combat mortgage fraud.

One of the best ways you can safeguard your servicing organization against fraud is to understand the servicing scams taking place in the mortgage industry. With the help of the Preventing Mortgage Fraud for Servicers fact sheet, you can educate yourself and your staff on the red flags and best practices of identifying fraud and the prevention methods that can be put in place to help protect your organization.

Updated Short Sale Transaction Requirements Enhance Loss Mitigation Efforts

Along with the new Preventing Mortgage Fraud for Servicers fact sheet, in Guide Bulletin 2011-23, we recently updated Guide Chapter B65 to provide additional guidance regarding Freddie Mac's short sale requirements. Beginning January 1, 2012, we are enhancing Servicers' ability to identify mortgage fraud more effectively as part of their loss mitigation efforts by updating our short sale requirements for:

  • Fees paid to parties involved with the short sale transaction.
  • Reflecting and identifying all parties and fees accurately on the HUD-1 Settlement Statement.
  • Liability for each signatory on the short sale affidavit and certain information that must be included in the affidavit.

With the updated requirements, Servicers can improve their mortgage fraud prevention efforts by accurately reflecting fees paid to any parties involved with a short payoff transaction, as well as providing detailed identifying information on the short sale affidavit itself.

For More Information

© 2012 Freddie Mac

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