Mortgage Fraud on the Rise
Mortgage Fraud is on the rise. Fannie Mae has released a warning for California, but this could be happening anywhere. The National Real Estate Post (Frank Garay and Brian Stevens) have a short 6 minute video titled “Red Flag Fraud Warning from Fannie Mae” about the warning.
Also on the video, markets with declining values have been discovered. Here in Virginia, appraisers have also noted some areas have taken a down turn over the past 4-6 months. Our purpose of sharing this with everyone is not to spread doom and gloom, but to remind each of us to really take the time to perform a proper analysis. Don’t assume anything!
Watch The National Real Estate Post video below.
For more information on the 10 U.S. Metros where home prices are falling the most, click here.
Excerpt from Fannie Mae’s Mortgage Fraud Alert:
Misrepresentation of Borrower Employment Scheme
Fannie Mae’s Mortgage Fraud Program (MFP) alerts the industry to potential and active mortgage fraud scenarios. This alert relates to a scheme involving misrepresentation of borrower employment.
Southern California, Los Angeles County
Loan common denominators / characteristics
Fannie Mae’s Mortgage Fraud Program has identified several entities listed on loan applications as places of employment that appear to be fictitious. The following list contains 34 entities / businesses that were listed as the borrower’s purported place(s) of employment but whose existence Fannie Mae could not confirm… Read more »
On June 7th, VaCAP representatives will be attending The Appraisal Foundation Advisory Council and Industry Advisory Council joint meeting. This is a full day event with Property Waivers and Hybrid Appraisal liability being key areas of discussion. We will have a full report of the meeting to share after the meeting.
Coester… Carson… Trump?
The Voice of Appraisal has a new show revolving around CoesterVMS and HUD. We will not even comment, but recommend every appraiser listen to the show.
Listen to E202 here.
Fannie Mae Mortgage Fraud Alert: Misrepresentation of Borrower Employment Scheme
- We the People… - April 9, 2023
- Federal Valuation Agency Impact on Appraisers & the Public - July 22, 2022
- Is Georgia Going Rogue? - June 13, 2022
OK, lets not panic OR misrepresent, (just as VaCAP also cautions).
The California schemes involved borrowers who purportedly had false income and employment histories created through several jobs at companies that don’t appear to exist except in borrower (and likely the correspondent loan ‘officers’) minds. Phony job verifications in California real estate dates back at least to the early 1970’s. Its not a new phenomena.
Congrats to FNMA (& possibly regulators) for recognizing a 48 year old problem has still not been eliminated. Y’all MAY want to consider why this specific type of fraud continues. [hint; it will be related to borrowers & selling agents to loan officer actions]. Also don’t forget “God Bless stated income loans and including income from Boarders or BnBs!”
As for declining value pockets, use CAUTION! Redfin just published a pretty comprehensive article and graphs showing INCREASE trends in each of the 124 over 750,000 population markets they analyzed. The increase was in the national median as a result of these studied markets.
One can argue EITHER side (rise or decline) equally all across the country. The rise in the national median is undeniable (from the Redfin reported data analysis). Trends become a bit more regionally or locally oriented.
San Jose, CA lead the way with rate of increase BUT pre summer selling season volume slowed. Is it a definitive statistic? Not really. It could be saying that the pool of higher end buyers is thinning out (30% drop in sale volume); OR it could be saying the housing shortage is so severe that unmet demand results in a drop in sales volume.
Broad market declines won’t (in my opinion) become verifiable until well into or after the summer selling season. End of second quarter at the earliest. The summer selling season is where the start of most price spurts or spikes is seen, so activity prior to and possibly through April is not definitive. December through March activity may or may not provide valid trend data. Certainly by the time we are through with June, a discernible trend is usually apparent (in bigger 750k population markets and over).
We had this kind of market in ’01-’02; and then again from ’05-’06 in bigger areas. It is a particularly challenging as well as risky market for appraisers. Caution is urged, but that caution should not be taken as a sign the sky is falling (again), or about to.
A rise in medians does not mean a rise is taking place across the board in all price ranges.
What all of this does mean is that appraisers need to be on their toes more than ever! Don’t allow yourselves to be rushed by clients; or to be pushed on values OR unsupported assumptions.
Raise your prices people. Quality work is going to take longer than normal in this kind of market.
Another great podcast by Phil. Total judgement in favor of Myriddian against Coester was posted today (6/4/18) and it’s $741k!
The creature from Coester island? Not quite yet, but getting there.
Because mortgage fraud only happens from individual applicants, and could never be associated with a manipulated fed rate. Where do you think the individuals got the idea that institutional corruption flew in real estate in the first place?