NMP - October 2016 - 29

he mortgage closing transaction is the single largest financial transaction in the lives of most consumers, and it is also the riskiest stage of the mortgage process for lenders. While the vast majority of lawyers and notaries and title agents are experienced, ethical and diligent professionals, for a few the role of closing agent is too tempting a lure for selfish criminal intent. This column addresses the good, the bad and the ugly! T You can't make this stuff up! This month, we feature some of the latest news about mortgage and closing fraud affecting our industry. These are real cases from around the country, only the names have been redacted to avoid threats of frivolous legal action ... l A California man stole a deceased person's identity and used it to defraud banks out of millions of dollars in fraudulent l A Massachusetts man who was the chief executive officer of a mortgage lender and Ginnie Mae seller/servicer, was sentenced for fraud for diverting $3 million in borrower payments to secret accounts for his business and personal use. l In Washington, D.C., two conspirators worked to create and record fake mortgage satisfactions to clear title and sell a residential property free and clear of liens. The paid then pocketed nearly $350,000, while the original lien holders were defrauded of their mortgage proceeds. l An organized fraud group in New Jersey has been busted, with two arrested and a third being sought for an elaborate identity theft and mortgage fraud scheme that netted them $1 million from eight fake loan transactions using fake documentation and straw buyers. 29 On the lighter side ... there are never enough of lawyer jokes Q: How many lawyer jokes are there? A: Only three. The rest are true stories. Q: What's wrong with lawyer jokes? A: Lawyers don't think they're funny and other people don't think they're jokes. Q: What do you call 25 skydiving lawyers? A: Skeet. Q: What do you call a lawyer gone bad? A: Senator. Q: What do you call a lawyer with an IQ of 70? A: Your honor. Andrew Liput has been a corporate, real estate and banking attorney for nearly 30 years He is the founder, CEO and president of Secure Insight, the first data intelligence and risk analytics firm to offer specialized vendor management services to mortgage lenders and banks nationwide addressing settlement agent risk. He can be reached by e-mail at ALiput@SecureInsight.com. n National Mortgage Professional Magazine n OCTOBER 2016 l An Arizona real estate agent was recently indicted and charged with defrauding Fannie Mae by hiding the fact that she and her relatives were buying nearly 30 real estate-owned (REO) properties for their own purposes and which she was listing. The indictment also refers fraudulent settlements and notary documentation witnessing. mortgage transactions. The "straw buyer" who had died in 1969, nevertheless purchased and mortgage multiple properties in that state which eventually defaulted. NationalMortgageProfessional.com Top industry news ... Wells Fargo pays big fine for unauthorized accounts after the Consumer Financial Protection Bureau (CFPB) uncovered an internal investigation that resulted in more than 5,200 employee terminations. Allegedly, Wells Fargo bank employees opened accounts and transferred funds without client approval for the sole purpose of meeting business quotas. The CFPB required Wells to pay $185 million as a result of the uncovered activities in early September. However, the bad news was just beginning, as at press time, it was revealed that a $2.6 billion civil lawsuit has now been filed against Wells claiming some of their people were terminated for not agreeing to comply with the illegal practice. Wells has had a hard time of it lately with the CFPB. You may recall that back in August, the CFPB took action against the bank for what it termed illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers. The Bureau identified breakdowns throughout Wells Fargo's servicing process, including failing to provide important payment information to consumers, charging consumers illegal fees and failing to update inaccurate credit report information and Wells was ordered to improve its operations, provide $410,000 in relief to borrowers and pay a $3.6 million civil penalty. Understandably, Wells Fargo is a big target, and when they are fined it makes headlines. In reality, the fines will have little impact on Wells Fargo's bottom line, although it clearly will influence future policies and procedures internally. Word on the street is that the American Land Title Association (ALTA) will soon be releasing details of its title agent uniform registration number initiative that will allow the industry to more readily verify title agent and licensed title producer license, underwriter affiliation and closing insurance letter data verification. This effort, which has been floated for years and gained momentum in the third-party service provider verification environment, will help move the industry towards greater transparency and accountability while supporting better operational risk management. ALTA has embraced settlement agent risk management, creating its Best Practices Program, and has offered education and assistance to title professionals on handling TRID and closing disclosure compliance issues, while also successfully representing their member's interests during the ongoing regulator and compliance debates in Washington, D.C. Mortgage fraud on the rise? According to a report issued by CoreLogic in September, mortgage fraud rose by 3.9 percent yearover-year in the second quarter. The report went on to state that there were 12,718 applications with evidence of fraud in the quarter, which represented 0.7 percent of all mortgages. The increase in purchase business as a component of overall volume was one reason given as refinances tend to have less risk of fraud.

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