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Thread: Mortgage Fraud

  1. #1
    Join Date
    Mar 2004

    Mortgage Fraud

    Today, the FBI and mortgage industry professionals believe 10-15% of all loan applications contain material misrepresentations, i.e. fraud. Many times these fraudulent loans end up in foreclosure resulting in financial losses to mortgage lenders. Unfortunately, many lenders recoup these financial losses from the public by increasing the cost of loans. Fraud hurts everyone. Fraudulent loans only exacerbated the lenders problems. Many times fraudulent foreclosed loans resulted in substantial losses. An example could have been a loan officer who fabricated pay stubs to help a borrower qualify for the loan -- insuring the loan officer collected his commission. Another example could have involved a borrower who submitted falsified tax returns. GAPS investigators researched files for misrepresentation and provided lenders the evidence needed to proceed with civil and/or criminal filings against the perpetrators. So the next time you or a friend applies for a loan, be forewarned: misrepresenting information on a mortgage loan application is illegal. Your information may well be reviewed by AEGIS (TM). If a lender detects misrepresentation, federal law provides for those convicted of loan fraud to receive a possible 30-year sentence and up to $1 million in fines! SOURCE: Robert J. Sadler, GAPS/AEGIS (TM).

    Last time, I wrote about the false sexual harassment allegations made against my friend "John". Well, it turns out there is a lot more to the story. John works as an underwriter for a lender in the non-conforming loan business. This lender receives its loan applications (via company sales personnel) from licensed brokers across the country. His job is to review all credit, income and collateral documents that are used to qualify a borrower for a mortgage loan. In the first few months of his new job, John was given extensive training by his supervisor much like an apprentice gets feedback as he hones his knowledge, skills and abilities. Ocassionally, John would discover fraudulent income documents and immediately report this to his supervisor. Surprisingly, the supervisor would handle it in a somewhat cavalier manner. He would simply instruct John to hand the file back to the salesperson. John never saw the file again. At the time, this did not appear odd to John as he was new at the company and was not educated yet about the company culture. All that changed the day John received the sexual harassment email from his supervisor.

    After recovering from the sting of such a false allegation, John began to wonder why and who would make such a libelous and slanderous charge. What was their modus operandi? Well, it didn't take long for John to put "two and two together" or shall I say "one and one together". A few weeks after receiving the email, John was informed by a trusted contact that his accuser had accidently blabbed over drinks of what she had done. His accuser was not the woman his supervisor had hinted at but rather someone who had much to gain by seeing John removed. After all, it was mostly her loans that contained fraud. This woman contributes well over a quarter of the entire sales team's loans each month bringing her very large commissions The supervisor for her and John receives a very large commission each month as well. John earns a straight salary. Who has the competitive political advantage? Or better yet, who has the most to lose? What are John's options? Should he continue to work for this company? Should he report any further fraud from his accuser? Can John trust his supervisor? How far up the corporate ladder does the corruption go? Should John contact the Federal Bureau of Investigation and/or Homeland Security? If John does nothing, can he be considered an accessory after the fact? What should John do?

  2. #2
    Suspended topspeed's Avatar
    Join Date
    Jun 2003
    Office politics, ugh

    How much hard evidence does John have? How good of an attorney can he afford. How well connected is he? Bottom line: How big are John's balls?

    If he is going to take on a multi-million (billion?) dollar corporation, he'd better be ready to have his life turned to sh!t. Don't think for one minute that the higher-ups are going to be on his side. A quarter of the production!?! Who's side do you think they'll be on? In addition, were this to go public, the company's image would take a hit so they would have to spin it like crazy. His outlook doesn't look good.

    That said, I'd take 'em to the house! I wouldn't talk to just the FBI either, I'd talk to the IRS. There's a dog with big teeth. The Feds may threaten you, but the IRS can immediately make your life miserable: Frozen accounts, credit refusals, attached wages, plus they'll pierce the corporate veil and start crawling up their personal accounts as well. Scary.

    This isn't really all that surprising considering the company specializes in non-comforming loans. Why do you think they call it "non-conforming" in the first place? I wish your friend the best of luck, he's going to need it.

  3. #3
    Forum Regular
    Join Date
    Nov 2003
    Doing the right thing is not without its consequences. Here, he needs to go above his supervisor and up the corporate chain armed with proof of the wrongdoing. He needs to have backup copies of the information as well, either paper or scanned and in a secure location. Is John's trusted contact prepared to testify about the person under oath?

    This isn't an issue for Homeland Security. John should move up the issue up the chain in the company, perhaps providing an annonomous tip to the fraud department and let them do the legwork. It would be good if he could provide some specifics but keep it general enough to keep him out of the limelight.

  4. #4
    What, me worry? piece-it pete's Avatar
    Join Date
    May 2002
    Cleveland Ohio
    Holy cow, Joe, your friend's really having a time!

    He should AT LEAST start taking detailed notes. Begin with everything he remembers so far, then update every night, with copies of documentation when possible. Detailed!

    IMO, they're going to screw him. The harrassment will be the cover. He should talk to a lawyer immediately.

    I think this because of the woman, if she's that powerful and already started on him he'll end up with the boot.

    If they can prove he knew about it, he's probably at least an accessory. Does he sign off on the documentation? If so, he'd better get in gear, he's probably an accomplice.

    I agree with the speedy one, after checking with a lawyer perhaps approach the IRS as well as the FBI. I would think a lawyer would know what to do.

    Wish your buddy luck from me!

    I fear explanations explanatory of things explained.
    Abraham Lincoln

  5. #5
    Can a crooner get a gig? dean_martin's Avatar
    Join Date
    Jun 2002
    Lower AL
    I agree that "John" needs to talk to a lawyer. If there is a possibility that gov't-backed loans are involved, then there may be an applicable Federal whistleblower statute that would protect him. A consultation with a lawyer should be free and then a fee arrangement can be made after the lawyer tells John what he can do for him. If there is an applicable whistleblower statute then the lawyer may be able to help John on a contingency fee basis so that he has no out of pocket expenses. (Typically, a whistleblower statute allows an individual to recover a percentage of what was owed to the gov't - or what the business cost the gov't in bad loans for ex.) This lawyer should also advise John on what he should do about the accusations of sexual harassment in the event he is served with a civil complaint or if criminal charges are brought. He may send him to another lawyer or look for insurance coverage that might provide a defense in a civil case. The lawyer who helps with the harassment matters may or may not be the same, but the 2 would probably share information. I don't believe the fee arrangements would be the same. Other issues to look at are the existence of an employment contract, constructive termination, retaliatory discharge, etc. all of which will probably be governed by state law. John really needs a lawyer to approach the gov't for him if it's necessary.

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