Chat
Chat with Sales Hours: Monday-Friday 8:30 a.m. - 4:30 p.m. (CST)
Contact Sales
Call Sales Toll-Free 1-(866) 774-3282 Hours: Monday-Friday 7 a.m. - 5 p.m. (CST)
Product Login
Product Log-in
Product Support
Product Support
Email Sales
Contact Sales
After Hours
  • Support
  • Sign In Sign In
  • AUS NZ UK
CoreLogic - Home
  • Solutions
    view solutions by:

    Data Solutions

    • Lead Generation
    • Property Data
    • Location Intelligence

    Real Estate

    • Multiple Listing Enterprise
    • Agent & Broker

    Mortgage

    • Origination
    • Servicing
    • Appraisal
    • Commercial Property Tax

    Insurance

    • Hazard Risk
    • Catastrophe Risk Management
    • Risk Evaluation
    • Underwriting Automation
    • Weather
    • Claims Automation
    • Restoration
    • INTRCONNECT

    Mortgage Lenders

    • Origination

    Mortgage Servicers

    • Residential Property Tax
    • Default & Loss Mitigation
    • Portfolio Insight & Monitoring

    Mortgage Appraisers

    • Appraisal

    Real Estate Agents & Brokers

    • Agents & Brokers

    Real Estate MLS

    • Multiple Listing Enterprises

    Commercial Real Estate Owners

    • Commercial Property Tax

    Marketing Departments

    • Property Data

    Insurance Underwriters

    • Risk Evaluation
    • Underwriting Automation
    • Hazard Risk
    • Catastrophe Risk Management

    Insurance Risk Managers

    • Risk Evaluation
    • Hazard Risk
    • Catastrophe Risk Management

    Insurance Claims

    • Claims Automation
    • Restoration Contractors
    • Weather Verification

    Construction Contractors

    • Restoration Contractors

    General

    • Location Intelligence
    • Lead Generation
    • Data Solutions
  • Resources

    Reports

    • Climate Change
    • Construction Cost Update
    • Construction Insights
    • Home Price Insights
    • Homeowner Equity Insights
    • Loan Performance Insight
    • Mortgage Fraud
    • Property Tax Delinquency
    • Single-Family Rent Index

    Insight Blogs

    • Hazard HQ
    • Office of Chief Economist
    • Affordable Housing
    • Homebuying
    • Insurance
    • Other Articles

    More Resources

    • Events
    • Case Studies
    • White Papers
    • Podcasts
    • Quick Takes
  • Company
    • About
    • Leadership
    • Newsroom
    • Contact
    • Careers
  • Search
CoreLogic - Home
  • Solutions
  • Resources
  • Company

    • About
    • Leadership
    • Newsroom
    • Contact
    • Careers
  • Accounts

    • Products Sign-in
  • Contact

    • Sales Contact
    • Product Support
  • Regions

    • Australia
    • New Zealand
    • United Kingdom
  • Social

    • Facebook
    • Instagram
    • Linkedin
    • Twitter
    • Youtube
Solutions
VIEW BY:
  • Data Solutions

    • Lead Generation
    • Property Data
    • Location Intelligence
  • Real Estate

    • Multiple Listing Enterprise
    • Agent & Broker
  • Mortgage

    • Origination
    • Servicing
    • Appraisal
    • Commercial Property Tax
  • Insurance

    • Hazard Risk
    • Catastrophe Risk Management
    • Risk Evaluation
    • Underwriting Automation
    • Weather
    • Claims Automation
    • Restoration
    • INTRCONNECT
  • Mortgage Lenders

    • Origination
  • Mortgage Servicers

    • Residential Property Tax
    • Default & Loss Mitigation
    • Portfolio Insight & Monitoring
  • Mortgage Appraisers

    • Appraisal
  • Real Estate Agents & Brokers

    • Agents & Brokers
  • Real Estate MLS

    • Multiple Listing Enterprises
  • Commercial Real Estate Owners

    • Commercial Property Tax
  • Marketing Departments

    • Property Data
  • Insurance Underwriters

    • Risk Evaluation
    • Underwriting Automation
    • Hazard Risk
    • Catastrophe Risk Management
  • Insurance Risk Managers

    • Risk Evaluation
    • Hazard Risk
    • Catastrophe Risk Management
  • Insurance Claims

    • Claims Automation
    • Restoration Contractors
    • Weather Verification
  • Construction Contractors

    • Restoration Contractors
  • General

    • Location Intelligence
    • Lead Generation
    • Data Solutions
Resources
  • Reports

    • Climate Change
    • Construction Cost Update
    • Construction Insights
    • Home Price Insights
    • Homeowner Equity Insights
    • Loan Performance Insight
    • Mortgage Fraud
    • Property Tax Delinquency
    • Single-Family Rent Index
  • Insight Blogs

    • Hazard HQ
    • Office of Chief Economist
    • Affordable Housing
    • Homebuying
    • Insurance
    • Other Articles
  • More Resources

    • Events
    • Case Studies
    • White Papers
    • Podcasts
    • Quick Takes

Home / Intelligence / Reports / Mortgage Fraud / Five Reasons Why Mortgage Fraud is Hard to Detect

ABOUT THE AUTHOR
Bridget Berg
Bridget Berg
Principal, Industry Solutions, Property Intelligence
View Profile
  • September 20, 2017

Five Reasons Why Mortgage Fraud is Hard to Detect

Part I of III in a series


“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain.

Unlike most common forms of financial fraud, mortgage fraud takes a long time to present itself, and as a result can lull lenders into a false sense of security. This leads to statements like the following:

“We’ve been in business a couple of years and we haven’t had any fraud.”

“Our delinquency rate is low, so we know we don’t have a fraud problem.”

“We haven’t had a large loss, so our current controls must be working.”

All true—until the day it isn’t.

Here are five reasons why you should be wary when everything seems fine.

  1. Mortgage fraud is a relatively rare event. Less than 1 percent of mortgage applications have material misrepresentations. Most fall under the heading of fraud for property: borrower misrepresentations of income, assets or liabilities in order to qualify for a mortgage. More serious fraud schemes – fraud for profit – often involve multiplayers, such as appraisers, loan officers and straw buyers, and are even rarer. But the potential for large losses, particularly with fraud for profit, makes fraud a serious problem.
  2. Many mortgage frauds are undetected. In a strong economy with home prices appreciating, borrowers who committed fraud-for-property can probably stay current on their loans. However, as the economy slows or home prices top out and go through a correction phase, fraud-for-property loans are more likely to default. The difficulty in identifying these loans as fraud is that they are most likely being treated in loss mitigation as a credit loss and not as origination fraud.
  3. Types of mortgage fraud can be cyclical. Falsified down payment sources, inflated income, and straw buyers were some of the more common issues leading up to the housing crisis. In the aftermath of millions of foreclosures, fraudsters shifted to loss mitigation fraud, such as short sale schemes, REO bid rigging, and loan modification scams. Fraud moves with the market and current opportunity.
  4. No one likes to air their dirty laundry. When fraud is an “inside job,” financial institutions are very cautious about disseminating information about operational fraud issues. Insider fraud involving employees or agents can heavily damage your brand. And senior managers may not be aware of the issues as investigations involving internal parties may be shielded under attorney-client privilege.
  5. The lag between fraud activity and its discovery can be lengthy. Other types of consumer fraud tend to be “fast moving.” Stolen credit cards are almost always used immediately. Check kiting is usually discovered in a matter of days. Mortgage fraud is much more insidious. Sophisticated schemes take measures to delay discovery, making payments to keep the mortgages current, and even ensuring false employment reverification requests are responded to appropriately. This enables the scheme to continue.

Summary

It is easy to create a false sense of security when it comes to mortgage fraud. The truth is that for financial institutions, the risk of fraud is always there. It shifts over time and can be operating right under your watchful eye. Understanding more about types of fraud and developing an ongoing process to monitor your operations is necessary for loss prevention. I will share more about current market trends and potential best practices in my next couple of blogs. Until then, be safe and aware.

© 2017 CoreLogic, Inc. All rights reserved

  • Category: Intelligence, Mortgage Fraud, Reports
ABOUT THE AUTHOR
Bridget Berg
Bridget Berg
Principal, Industry Solutions, Property Intelligence
View Profile

Related Posts

mississippi tornadoes
Blogs

March 24 EF-4 Tornado in Mississippi

CoreLogic estimates over 4,100 homes were within the path of the tornado that hit Mississippi on March 24, 2023.

March 29, 2023
California Atmospheric Rivers
Core Conversations

What Was it Really Like to Live Through the California Floods? Our Team Spills | Part 2

In Part 2, host Maiclaire Bolton Smith talks about the atmospheric rivers and the snow that has made headlines and headway in altering California’s natural hazard landscape.

March 29, 2023
CSI_Promo_Mar2023
Blogs

US CoreLogic S&P Case-Shiller Index Gain Slows to Pre-Pandemic Low, Up by 3.8% Year Over Year in January

The index continued to decline year over year in January, again posting a single-digit gain.

March 28, 2023

About Corelogic

  • Newsroom
  • Leadership
  • Careers
  • Ethics & Compliance

Accounts

  • Products Sign-in

Contact

  • Sales Contact
  • Product Support

Regions

  • CoreLogic Australia
  • CoreLogic New Zealand
  • CoreLogic UK

Follow & Connect

  • Facebook
  • Instagram
  • Linkedin
  • Twitter
  • YouTube
© 2023 CoreLogic. All rights reserved.
  • Legal
  • Privacy Policy
  • CCPA
  • Cookie Preferences
  • Security
  • Sitemap
  • Accessibility
  • Legal
  • Privacy Policy
  • CCPA
  • Cookie Preferences
  • Security
  • Sitemap
  • Accessibility