Mortgage Loan Compliance | New Fannie Mae Quality Controls

Fannie Mae’s new quality control requirement is designed to prevent a type of mortgage fraud called "shotgunning."

Beginning June 1, 2010 lenders originating mortgages being sold to Fannie Mae will have to pull a second credit report just before the loan closes.

By pulling a second credit report, lenders can find out whether other creditors have recently requested information about the borrower-typically a red flag indicating someone might be trying to obtain multiple loans from several lenders on the same property.

In most cases involving shotgun fraud the borrower skips town with the proceeds of all his loans. The lenders do not recoup any money because their mortgages are subordinate liens to the first recorded mortgage and the foreclosure sale will not be enough to cover the junior liens.

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Mortgage Loan Compliance | Rise In Production Rise In Appraisal Fraud

According to LexisNexis Mortgage Asset Research Institute, Residential originations rose last year and along with them, the industry experienced an uptick in appraisal and valuation fraud.

"As lenders try to stave off mounting losses on nonperforming loans, they are trying to modify loans that have been falling into default," said Denise James, director of real estate solutions for LNMARI. "Fraudsters are taking advantage of desperate and confused consumers."

Foreclosure rescue and loan modification scams are also increasing, and the company is seeing a significant rise in short sale scams.

The most troubling fraud trends include fake tax returns and income and application misrepresentation, LNMARI said in its annual fraud report. Speaking at a press conference during the Mortgage Bankers Association's fraud show, LNMARI noted that Florida is leading the nation in suspected fraud followed by New York and California.

In 2009, 33% of all reported frauds involve appraisal misrepresentation, up from 22% in 2008.

States experiencing noticeable gains in fraud include Arizona, New Jersey and Virginia. "Loss mitigation distractions have opened the door for opportunistic fraudsters to take advantage of desperation, confusion and complacency," said James.

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Mortgage Loan Compliance® | The Forensic Loan Audit Company

For A Limited Time Order A $59 Rapid Report Forensic Audits Or A $295 Certified Forensic Compliance Audits.

Call Today 1-866-966-6615 or Visit www.ml-compliance.com