Around two and a half years ago, Freddie Mac was pretty fed up with fraud. So, they did something about it, and the results were staggering.
According to estimations in an Executives Perspectives blog, the top fraud officer at the government-sponsored enterprise, Joan Ferenczy, said her office dealt with 3,300 additional reports of potential fraud since adding a new anti-mortgage fraud chapter to the Seller/Servicer Guide.
"Recently, Freddie Mac broke up a “ring” of former industry professionals operating a “company” that falsified the income, employment, and assets of their clients to qualify them for mortgage relief they would not normally have been eligible for," writes Ferenczy on the success of the program. "Every file this company sent in had identical pay-stub templates and bank account statements that did not belong to their clients."
Freddie Mac heard about the ring from one of their lenders. That's because under Chapter 7 (Mortgage Fraud Detection, Prevention and Reporting) regular fraud reports are now a contractual obligation.
For example, a mortgage servicer needs to report cases of first payment default — usually a sign of something awry.
Freddie Mac expects the numbers to keep increasing, we suspect, as more lenders continue to adopt the required standards.