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Detecting Mortgage Fraud


It’s become a fact of life that fraud is pretty much everywhere nowadays. From government programs to emails from Nigerian princes and everything in between, scams are rampant and you have to constantly be on your toes.

Sometimes even licensed professionals engage in fraud. After all, fraud allows a person to make a profit from somebody’s loss. Mortgage lenders, banks, and others in the industry are known for engaging in such schemes to gain a customer’s house or money. Predatory lending was especially popular a decade ago, but can still happen. Sometimes even home buyers and sellers concoct fraud schemes to get something for nothing.

Those in the mortgage industry have a lot to lose if they get caught. They can face license suspension or revocation. This means they will lose their career and everything they have worked hard to achieve. Is it worth it?

Types of Mortgage Fraud

There are two main types of mortgage fraud:

  • Fraud for profit. This is the most common type of fraud, as people are motivated by money. In the real estate and mortgage industries, this may include identity theft, appraisal fraud, and fraudulent flipping.
  • Fraud for property. This type of fraud is more common among potential home buyers. They may exaggerate or lie about income and assets in order to qualify for a mortgage. This type of fraud comes in the form of identity theft, employment fraud, income fraud, asset fraud, and occupancy fraud.

Regulations for Employees in the Mortgage Industry

There are minimum standards for mortgage loan originators under the Secure and Fair Enforcement (SAFE) Act. They are required to be licensed and registered under the Nationwide Mortgage Licensing System and Registry (NMLS). The SAFE Act also requires banks to:

  • Create written policies and procedures to show that they are complying with SAFE Act regulations.
  • Test these policies and procedures to assure compliance with the SAFE Act regulation.
  • Ensure any identified deficiencies or violations have been corrected.
  • Take the proper steps to ensure any further violations do not occur.

There are also regulations under anti-money laundering and Bank Secrecy Act laws that require banks to detect and prevent mortgage fraud that could result from issues such as suspicious activity, sources of funds, and customer identification practices.

In any case, fraud can happen anytime, anywhere. There is huge potential for these schemes, so banks, mortgage lenders, real estate agents, and others in the industry need to be especially vigilant.

Keep Your License With Help From a Tampa Mortgage Lenders Licensing Lawyer

Most homeowners turn to mortgages to pay for their homes, but there is a lot of potential for fraud in this field. Any time there is a large amount of money involved, you need to be aware of scams and fraud.

If you are a mortgage lender, Tampa mortgage lenders licensing lawyer David P. Rankin can help you with licensing issues. Protect your license and livelihood. Schedule a consultation by calling (813) 968-6633 or filling out the online form.