Maryland Leaps to #5 in National Mortgage Fraud Report

May 28, 2009 - PRLog -- According to the Mortgage Asset Research Institute (MARI), Maryland has developed into a mortgage fraud hotspot, leaping from 29th in the country in 2004 to 5th in 2008.

As loan losses mount, lenders look to fraud investigations as a way to recapture ill-gotten gains from perpetrators.  The Federal Bureau of Investigation (FBI) has increased its investigation and prosecution of mortgage fraud.  In 2003 the FBI opened 295 cases.  In 2008 investigations increased to 734 cases with over 2,000 current active investigations.  On May 25, 2009, Congress passed additional fraud investigation legislation as part of a financial industry reform effort.  

On May 23, 2009, QuickStart Publications, Inc., located in Rockville, MD, announced its 2009 Quality Control Workshop series of classes.  The workshops are designed to help small and mid-sized mortgage companies, mortgage brokers, and banks that make mortgages develop internal controls to prevent and detect fraud in loan files.  

According to Thomas Morgan, President of QuickStart, “Large banks and mortgage companies have the infrastructure to implement controls.  Many smaller lenders and operators have never had to execute fraud prevention functions.”  The smaller companies are the ones at greatest risk, but they are also the ones who have difficulty supporting the high costs.  Since affordability is an impediment, “we provide a program with minimal costs that allows the company to do most of the functions internally,” says Morgan.  “We just show them how.”

According to Ralph LoVuolo, President of Fraudmit, a Florida-based post-closing audit firm, “Fraud has serious consequences for mortgage company owners, but if they aren’t doing something to proactively prevent it, to a regulator or prosecutor it looks like the operator is ignoring issues intentionally.”  Companies without controls in place should expect heavy fines, prosecution and even permanent disbarment.  Fraudmit allows companies to outsource the fraud detection process on closed loan files.  

The Federal Housing Administration (FHA), which insures 36% of the nation’s single family home loans originated in 2009, regularly monitors and examines lenders.  On May 19, 2009, FHA announced sanctions and penalties levied on 120 program participants.  The predominant finding was “Failure to implement a Quality Control Plan.”  

“If mortgage companies are serious about being in business going forward,” says Morgan, “they have to participate in managing the systemic risk, and that starts with having a fraud prevention program.”  Information on the workshops can be found on the internet at www.qcseminar.com or by calling 877-918-7246.

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QuickStart Publications has provided training programs to the consumer lending industry since 1996. The firm specializes in skills-based vocational training, mortgage regulatory compliance, fraud prevention and quality control. www.lendertraining.com.