How Not to Commit Mortgage Fraud

By April Brewster Smythe

Keyword Strategy

Mortgage brokers, mortgage fraud, notary signing agents, identity theft, how to prevent identity theft, business finance loans

The majority of the American public understands that the notary public signing agent is the first line of defense against identity theft.    The Mortgage Fraud Index had good news for the last quarter of 2012, where it was shown that mortgage fraud action had declined.  However, mortgage fraud is expected to rise again throughout 2013.  Because of this, it is important to understand how not to commit mortgage fraud, so that you can insure that you do not commit this act, and end up in an orange suit, making license plates at the area correctional center.   Many innocent home buyers unknowingly are lured into mortgage fraud due to the actions of those unscrupulous few who want to make a buck off of the ignorance of these gullible home buyers.  Don’t be gullible!  Make sure that the personal information that is shared on all of the financial documents prepared for a home mortgage is protected.

This writer wanted clarification on precise ways that the notary signing agent protects consumers.  I turned to a respected notary signing agent located in Fort Wayne, Indiana for illumination on these three points

1)      Procedures in Place – A well-respected notary signing agent in this region gave me this insight into the methods used by notaries to protect documents, “I usually am required to log onto a secured website to download documents from title companies’ websites but I do still have a few clients that send closing documents in a PDF file that do not have these files password protected”.  This is significant due to the fact that falsifying employment income and inaccurate reporting of deposit money are both forms of mortgage fraud.  The information given on an application must be protected so that devious white collar criminals do not steal vital personal financial information.

2)      Rapid System- Notary signing agents guard their PDF files judiciously.    They have a rapid system in place if their computer is stolen or misplaced. A local notary added this comment to the guarding of PDF files, “With the new laws and procedures going into effect in the mortgage industry to protect customers private information there will need to be changes to safeguard customers’ private information by every mobile notary.”

3)      Prepared-The alert notary signing agent is prepared for any occurrence. If a No Show or a No Sign occurs they are ready to protect personal financial documents that are in their possession.  This same local notary signing agent shared this procedure, “When a loan doesn't close I am either required to send documents back to the title company or I take them to a company that shreds documents in front of me.”  That is a sure-fire way to protect documents!

The above protections by notary signing agents who work with honest mortgage brokers help all concerned and forestall mortgage criminal activity.  But, tough economic times may lure even the most sincere home buyers into mortgage fraud. 

The Silent Second Mortgage - Once upon a time Mr. and Mrs. R. HHOME BIER decided they really wanted to buy a home instead of renting the two bedroom apartment they had lived in for twenty years.   At their weekly euchre tournament they began talking to the couple who they were playing against, Mr. and Mrs. W.E. Got Funding.

Mr. and Mrs. Bier had known the Funding’s for over two years and felt they were trustworthy.  After all they all went to the same church, their children played together, and they seemed to be fairly good euchre players.  The Funding’s had a home they were selling and told the Biers they would let them borrow the down payment from them ( the Funding’s) – but warned the Biers that this had to be a deal between the two couples and they were not to disclose this loan to the mortgage brokers.   The loan would not be recorded and no one would be the wiser. 

Unfortunately, for the Biers and the Funding’s a very savvy and alert notary signing agent caught the two couples in their scheme while carefully going over their financial documents before the closing.  Sadly, today the Biers and the Funding’s do not have to worry about buying or selling a home because they are enjoying the accommodations of the Arizona State Correctional Facilities. 

Yes, making a loan for a down payment on a house loan and not disclosing this transaction is mortgage fraud.   Don’t be gullible.   Be meticulous when you choose your mortgage broker and don’t be taken in by those who may prey on the goodness of your soul or your ignorance of the law.