The Mortgage E-Verify Act, introduced would require that the identity of all applicants for new or modified mortgages held by Fannie Mae or Freddie Mac or insured by the FHA, be confirmed through the E-Verify program of the Department of Homeland Security.
U.S. Congressman Rep. Kenny Marchant from Texas has just introduced a bill intended to prevent mortgage fraud by illegal aliens.
"My bill will potentially save millions by cutting down on fraudulent claims from illegal immigrants and protect taxpayers from subsidizing the restructuring or renegotiation mortgages of illegal immigrants," said Rep. Marchant in a press release.
Marchant cites Treasury Department data showing that incidents of mortgage fraud increased an estimated 1,411 percent from 1997 to 2005. "Furthermore, two-thirds of fraud reports in the last decade are due to falsified statements on loan documents," he noted. "My bill would curb these abuses and protect the taxpayers."
There was a major case in Nevada where a mortgage company branch manager conspired to manufacture and submit false employment and income documentation for borrowers, most of whom were illegal immigrants. Fifty-eight of the 233 fraudulent FHA loans totaling $6.2 million have, not surprisingly, gone into default, costing HUD nearly $2 million. The branch manager was found guilty on 32 counts of submitting false information to HUD, and one count of conspiracy. -- U.S. Rep. Kenny Marchant press release.
I am pleased that Rep. Marchant has taken this step as mortgage loans must be scrutinized one at a time, because the industry is based on people and relationships. It all starts with a homeowner or homebuyer working with a loan officer and or a real estate agent. Within these working relationships, trust is established, most for good, but some with the intent of defrauding the client. The solutions to the mortgage fraud epidemic can and will come from observing loan production at origination level and this bill “Mortgage E-Verify Act” will assist in the “Clear To Close” Process.
In short, the solution to the mortgage fraud crisis is to re-tool and improve the pre-funding process of loans, including a better education of the individuals involved with the origination of each individual transaction. This does not have to be a major re-tooling – more like a tweaking of the internal processes for the origination of mortgages. We need an "is it really clear to close" attitude. The majority of the tools needed to prevent mortgage fraud already exist, they just need more oxygen, so to speak; and access to better education must be available in the industry, as to how to utilize these tools correctly.
We must be vigilant against fraud, recognizing its signs and taking proactive, definite, and realistic steps to not only prevent it but also punish it.
It starts with me.
It starts with you.
It starts with us…
Michael S. Richardson
Director/Mortgage Fraud Services
Author of "An American Epidemic, Mortgage Fraud a Serious Business"