Forgotten Fraud: A Post-Crisis Review of Mortgage Fraud and Where the Industry is Today

Linda Settle, CAMS-FCI

Although the worst of the recent mortgage crisis appears to have passed, the residual effects are still being felt in many areas of the country and the industry itself. Many articles and books were published about the crisis – the causes, the victims and those responsible. Movies have been produced that condensed the drama of those events into a couple of hours that took years to live through. But the fallout and damage lingers longest with those whose homes and dreams were lost. These traumatic events will haunt them for years to come. Because of the crisis, government regulators have stepped in with a long list of new regulations and requirements in an effort to hold the industry more accountable and prevent the abuses that contributed to the crisis. This is not intended to assign blame – there is plenty of that to go around for all industry participants. This is not even to identify and address all of the contributing factors that led to the crisis. But every account will assign some level of fault or blame on the underlying fraud that was rampant and at the center of so many of the transactions.

There are signs that some of the same issues are back along with some new concerns. This paper will present information regarding the fraud schemes that were so prevalent in the run up to the financial crisis and the fraud concerns today. It will also provide some detection strategies and best practices to mitigate the risks, as well as suggestions for enhanced due diligence related to these issues.

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