Mortgage fraud reports rose 31% in 2011, costing the industry $3 billion as fraudsters have changed their target from loan origination to default servicing, loan modifications, short sales, and property liquidations. Mortgage companies need to change their mortgage fraud prevention strategy.
As the mortgage industry has undergone a rapid-fire transformation, a familiar threat has been building during the last few years with renewed energy and severity: mortgage fraud.
The number of suspected mortgage fraud reports filed with the Treasury skyrocketed up 31% in 2011 creating an industry price tag of $3 billion. Compounding the issue is the changing nature of mortgage fraud. Historically, mortgage fraud has been largely confined to the loan origination process; but with the sharp increase in mortgage defaults, fraudsters have evolved their schemes to target default servicing. More fraud is occurring among loan modifications, short sales, and property liquidations than ever before.
The need for increased vigilance around fraud monitoring and prevention is more important than ever. Without enhanced controls and detection methods, mortgage companies risk becoming a preferred target, increasing their exposure to losses.
This point-of-view describes the 10 steps each mortgage company should consider taking to combat mortgage fraud. These recommendations are based on our industry insights and leading practices observed across mortgage companies of all sizes, and can help protect your organization against one of the most costly threats to the industry.