As you know, real estate is a people profession. From the real estate agents in the field, to the loan officers or loan processors working with borrowers, to the title agents sitting down with families closing on their first home, we are people serving people. Those who would commit fraud know this, perhaps even better than we do. In addition, like those of us who are legitimately doing good business in the real estate finance industry, they need people to pull off their scams. What kind of people? Willing people, that’s who. People willing to help them lie, people willing to buy shell properties or willing to work for shell corporations or those who are willing to falsify the facts, figures and documentation. They cannot do it alone, and more often than not, they come to us for help.
The sad part is that some of us don’t even realize when we’re being included in a fraudulent scheme. I believe some of this is partly due to ignorance, other times it is out of laziness. More times than not in the hustle and bustle of our daily lives, it’s out of sheer busyness, but sometimes, it is simply due to a “don’t ask, don’t tell” policy that is quietly eating away at the very integrity of the home financing industry.
Whether we are supervising folks who are helping out these fraudsters or being duped into helping them ourselves, knowing the buzzwords the bad guys use is often our first line of defense in actually ignoring what they have to say.
Here are the most common terms, phrases and come-ons I’ve discovered:
“This is done all the time.”
Part of a fraudster’s ploy is to lure you into believing that what you are doing is not wrong when, in fact, nothing could be further from the truth. While fraud may be committed every day, that doesn’t mean you have to be a part of it or, for that matter, tolerate it. Phrases like this one—designed to entice you via the element of conspiracy or convenience—should be a definite red flag as to not only who is committing fraud but, in fact, how they’re doing it. Take the first step toward vanquishing fraud in your own private kingdom: Report such behavior immediately.
“We have never had a problem with it before.”
Fraud is an insidious crime. It starts slowly and works its way into the most honest companies, as I have witnessed firsthand when fraud was committed right under my nose by a long-time trusted employee. I, too, never had a “problem with it before,” i.e. employees committing fraud, until I realized it was too late and the U.S. Department of Housing & Urban Development (HUD) shut me down! I once heard someone say that the biggest problems aren’t immediately revealed, they are eventually discovered. Just because something hasn’t been a problem before does not mean it won’t be in the future and, most likely, it’s a warning sign that this will, in fact, become a problem before too long. Again, early detection and immediate reportage are the two biggest counter-effects for such fraudulent statements.
“Can you throw that one away and I will get you a new one?”
Documentation is the means by which fraud is produced. After all, it’s the documents that get doctored and the documents that pass without scrutiny by busy or hurried handlers that allows fraud to exist. The forms we use in our industry are nothing short of holy; they are the means and tools by which we borrow and lend. “Throwing one away” is a sure sign that something is amiss, and to combat this all too common practice, we should all implement a means of collecting discarded documents, to be reviewed at the end of the day, week, month or quarter. Much like scientific laboratories have special bins and procedures for destroying biohazard items, we too should treat such requests as “hands off” and, as we should all such statements, report them immediately.
“This loan needs to close quickly … it is a super rush.”
Time is the ultimate motivator. Why? Because time, after all, is money. Especially in our business, when an increase in the interest rate or public perception that a market is no longer “hot” can mean the difference of thousands, if not tens of thousands, of dollars. This is an old salesmen tactic, and while most of us reading it can see its intent a mile away, you’d be surprised by how the right person in the wrong situation can succumb to such an obvious and blatant come-on. After all, it’s worked for used car salesmen for as long as, well, there have been used car salesmen. Why shouldn’t it work in our industry as well?
“No one will ever catch us.”
Risk may be the ultimate rush, but we’ve all seen those “World’s Dumbest Criminals” shows on TV, and the only difference between a bad guy robbing a bank and a bad guy committing fraud is that they usually don’t show up on surveillance cameras. Even if they did, it’s quite hard to spot someone forging a document when it’s just as easy to put down the right figures, as it is to write in the wrong ones. What would we look for, anyway? A phony moustache and sunglasses? A secret decoder ring and trench coat? If we cannot always see fraud being committed, we can certainly hear it, and it’s important for us to keep our ears open, as well as our eyes.
For that matter, let’s open our minds as well. Detecting fraud is a mindset, much 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.
Only then will we start to believe that it exists. When we believe in the existence of fraud, we can then start taking active steps, every day, to combat it. It may be an everyday battle, but the longer we fight, the stronger we get, and once something becomes a habit, the less difficult it is to achieve and the harder it is to forget.
Like the latest technology the bad guys and gals use to commit fraud, fraudsters are always on the cutting-edge of criminal vocabulary to get innocent pawns such as you and I to help them commit their crimes … never forget, fraud is a crime!
Like fashion or pop music, what fraudsters say to dupe us will go in and out of vogue from year to year. Industry terms will change and so, too, will their tactics and terms to keep up with the times. Training seminars, workshops, new fraud prevention procedures, Web sites, newsletters … they can all help to educate us on the various buzzwords and phrases to look out for, but we can only combat fraud so far because the bad guys tend to work much harder at this than we do.
Remember, all I’m trying to do is educate you as to the various ways in which the fraudsters do business. Obviously, new information comes out on a daily basis that will have tips and strategies the bad guys have adopted since this publication, but at the core—and the way in which we’ll stop the bad guys—will be the same principles of fraud.
Buzzwords, forms, technologies, interest rates, documents … these will all change, but so too must we to keep up with the latest cons these fraudsters are pulling. After all, sometimes it’s not even what the bad guys are saying, but how they say it.
Are you listening?
Michael S. Richardson is director of forensic mortgage services for Lenders Compliance Group and author of the book, An American Epidemic: Mortgage Fraud—A Serious Business. He may be reached by phone at (516) 442-3456, ext. 102.