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Lenders beware of these new fraud schemes in California

Fannie Mae issues fraud alert for Los Angeles area

Fannie Mae issued a fraud alert to mortgage lenders in Southern California, saying it identified several employment entities that appear to be fictitious.

The company’s Mortgage Fraud Program identified 34 “employers” listed on loan applications from Southern California and Los Angeles County whose existence it could not confirm. The following is the list of possibly fake employers, updated as of May 22, 2018.

Click to Enlarge

Fraud alert

(Source: Fannie Mae)

Fannie Mae warned that if one of the above companies is listed as a borrower’s place of employment, lenders should exercise extra caution while reviewing the entire loan file.

“Lenders must exercise caution in these situations and take appropriate steps to prevent the institution from being the victim of fraud,” Fannie Mae said in its fraud alert.

Some of the red flags lenders can watch out for to identify where this type of fraud could be occurring includes TPO and broker loans, loans originated from 2015 to 2018, when an occupation does not seem to comply with a borrower’s profile, such as age or experience and loans originated in Los Angeles county.

“Prudent origination, processing, and underwriting practices should include looking for red flags in the loan documents that raise questions about the transaction,” the company stated in its alert. “Verify that the borrower’s place of employment actually exists and obtain supporting documentation.”

Fraud issues continue to increase in the U.S. as lenders, borrowers, title companies, real estate agents and all participants of the mortgage industry are hit on every front. In fact, last year’s March HW Magazine featured a story on mortgage companies increasing their security after a record number of hacks.

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