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Identifying Mortgage Fraud in 1-2-3

identifying-mortgage-fraud

It’s hard to be a lender.

Lenders, unfortunately, are constantly tested and charged with the task of catching mortgage fraud. Whether you are dealing with the end-customer, real estate sales professional, mortgage broker, builder, etc. the buck stops at you! At the end of the day, it is your institution that stands to lose if fraudulent deals go onto the books. If you are a lender, big or small, mortgage fraud hurts because the likelihood of being able to retrieve funds from a fraud deal are significantly lower, when compared to a clean deal that simply goes into default.

So what can you do/look at to mitigate your risk with regard to mortgage fraud? To begin with, ask yourself some pointed questions and perform searches to answer them.

  • Was the last transaction a cash sale? Check if there have been any mortgages registered since the last sale.
  • Is the property high or low risk in comparison to the relative market? Validate the price consistency in comparison to that of other similar properties in the area.
  • Is value real estate fraud present? Check recent sales as well as multiple sales activity on the property being financed.
  • What is the profile of the property being financed? Check the property for previous power of sale foreclosures. What is the frequency of power of sales in the area?
  • Is the property owned by a corporation?
  • Are there liens or other cautions on title to the property?
  • Is the transaction non-arms-length? Check the applicant’s last name against the current and past ownership on record.
  • Is there anything suspicious on title? Check for recent discharges of mortgages that follow a recent transaction where the mortgagor is the same.

You will be as astute at catching mortgage fraud as the tools you use. It is important to leverage tools that tell you about:

  • The property being financed – value, condition etc. – both current and historically
  • The financial standing of the property being financed – both current and historically
  • The property’s ownership – both current and historically
  • The area within which the property is being financed

A lot of pressure is placed on underwriters to identify mortgage fraud. If a fraudulent deal comes to you, that means that it has already passed through a number of hands and either no one has noticed or have chosen not to notice. That being said, your tools should have the capability and filters in place to assess volume data and flag potential issues. It is up to you to protect yourself in every situation.

At Purview For Lenders, we have the tools that make identifying mortgage fraud easier.

Take advantage today by visiting https://lenders.purview.ca/.

 

 

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