October 16th, 2007
Tales of a Mortgage Fraud Investigator
The Story of the Greedy Widow
A woman shows up the the closing of an upper end house. Says her husband,
who is the designated buyer, cannot attend the closing. She presents a power
of attorney to the closer from the title company.
Legally, that power of attorney should have been signed by the HUSBAND
giving the power of attorney to his much younger wife. But the WIFE signed
the power of attorney for the husband and the closer accepted the document.
The closing proceeded and the wife walked out with a buyer refund check of
$20,000 and the keys to a beautiful new house in her husband's name. That
was six months ago and the husband has never made one payment on the house.
The husband could not have signed the power of attorney or made the payments
because he died the day before the closing.
So much of the rampant foreclosure crises could have been prevented if
someone was paying attention along the way.
Another common problem seen by this mortgage fraud investigator is stated
income totally out of line with a given profession. Range of incomes for
professions, say beauticians for example, are readily available on websites.
Plus, when an underwriter reviews thousands of applications with income tax
forms you would think that they would build a knowledge base that, say,
beauticians make X and if all the sudden a beautician is making 4X maybe
there's a problem?
The investigator also studies the appraisals in every one of her files. She
has noted in neighborhoods throughout the country where there has clearly
been a decline in value she has NEVER seen even one appraiser check the box
for "neighborhood is in decline".
Based on this investigator, one of the most significant causes of the
increase in mortgage foreclosure is inertia in those underwriters,
appraisers and closers that should have caught the problems before the deals