Detecting mortgage fraud is a mind-set, like exercising or eating right. Habits are born of routine and the surest way to start spotting fraud is to become aware of its existence. A former loan officer in Vancouver, Washington, was sentenced on March 29, 2010, by U.S. District Judge Garr M. King to serve 24 months in prison after pleading guilty to a charge of aggravated identity theft. Herndon must also serve one year of supervised release following his prison term. The defendant was ordered to report to the custody of the Bureau of Prisons on June 1, 2010. He was indicted February 19, 2009, on aggravated identity theft charges after he submitted three materially false loan applications to purchase homes for his girlfriend. The applications totaled more than $1.5 million for homes located in Milwaukie and Portland and Edmonds. The former mortgage broker put together three fraudulent home sales surreptitiously, taking thousands of dollars for himself from each of them, allegedly $224,668 in kickbacks from three deals. In each fraudulent home purchase, the buyer was the fraudster’s then-girlfriend, though federal prosecutors claim she wasn't aware of one of the deals done in her name. This Fraudster is the third former employee of Lighthouse Financial Group, a large Vancouver mortgage brokerage, to be charged with federal crimes. The Fraudster submitted loan applications containing inflated income numbers and other inaccurate financial information. One of the homes that the fraudster purchased in his girlfriends name at the time was a newly built, 3,200-square-foot home for $635,000. The thirteen months later, the county records showed, a notice of default was filed the County. Then the lender Deutsche Bank Trust Co. bought the property at a trustee's sale for $432,000 re-sold the house for $350,000, creating a loss for the bank of hundreds of thousand dollars. This mortgage fraud scheme illustrates the powerful downward pull on property values exerted by combining mortgage fraud and identity theft. To many of the defaults and foreclosures follow when Fraudulent home purchases, which then significantly affect neighborhood market values in a negative way to the honest hardworking homeowners that would never commit mortgage fraud never the less steal someone’s identity. We should all congratulate the following people who have worked and investigated this case by the Internal Revenue Service, Criminal Investigation, the United States Postal Inspection Service and the FBI. The case was prosecuted by Assistant U.S. Attorney and Senior Litigation Counsel Allan M. Garten. It is important to note that institutions don’t commit fraud, lenders don’t commit fraud, companies don’t commit fraud – people commit fraud and unfortunately even close friends sometimes. 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 www.mortgagefraudsolutions.com Author of "An American Epidemic, Mortgage Fraud a Serious Business" Follow me on Twitter “FocusonFraud” Please share these articles with friends and family! http://tinyurl.com/yzsdjpv One of the most difficult aspects of dealing with mortgage fraud is that it is hard to know the scope of the problem. They won’t look like criminals, they’ll look like loan officers, real estate agents, members of management and loan processors or closers and, of course, the next door neighbor or even a friend.