The FBI reports that fraud is large and growing. Even if the bureau wasn’t telling us that mortgage-fraud-related indictments and convictions are increasing, just about everybody in this industry knows that fraud is a huge problem. Unfortunately, it seems that awareness isn’t helping much.
So, why is mortgage fraud increasing at such a rapid pace? The answer may lie in pressure to get things done. It occurs when loan officers, appraisers, wholesale representatives, or title representatives bend the rules just so they can get a deal done. There is no kingpin masterminding the misrepresentation. There is no intent to revolve equity or to make loans on homes that don’t exist. There is no extra profit or kickback — just a standard fee or commission for the service.
The temptation to try to justify fraudulent behavior often occurs when times are tough and the pressure to bring deals in the door becomes too much to handle. In these cases, mortgage professionals may be more likely to force loans into the system. Appraisers say that loan officers pressure them into inflating property values. They claim that if they don’t hit the “desired” value, the loan officer will just find another appraiser who will.
This pressure is real, but it’s not exclusive to appraisers.
Loan officers also tell of referral sources that pressure them into certain misrepresentations. They claim that if they don’t get a loan approved, the referral source will never use them again.
It is also true that some loan officers feel pressured by their sales managers, as well as by their own dwindling bank accounts. Wholesale and title representatives report the same pressure from their business sources, as well. They know that if they turn down files or stop closings, they’ll get a reputation of being difficult.
In each of these scenarios, there is the threat of losing business if you don’t do what your client wants. It is my understanding that most real estate finance professionals do not give in to this pressure. But the pressure is enough of a problem that these issues often are discussed in fraud seminars and forums.
There is no gray area. There is a thin black line, and you’re on one side of it or the other. If you’re ever indicted, it will be completely ineffective to say that you were just “cutting corners in the gray area.”
What it all comes down to personal responsibility and integrity. The solution — the protection to the economy, your companies, your careers, and your families — has to do with the choices you make to deal with business pressures in a positive way.
Jerome Mayne is President and founder of Fraudcon, Inc., a fraud deterrent company. He is the author of the book
Tags: ethics, felon, Fraud, humorous, mortgage, motivational speaker, public speaker, real estate
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