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Table of Contents
1.
Introduction ....................................................................................................... 4
2.
What is Mortgage Fraud ................................................................................... 5
3.
The Types of Fraud .......................................................................................... 5
A.
Fraud for Profit ........................................................................................................ 6
B.
Fraud for Property ................................................................................................... 8
C.
A Final Word about Fraud Categories ................................................................... 10
4.
Who is Committing Fraud? ............................................................................. 10
5.
How Big is the Problem
–
Sizing the Beast .................................................... 12
A.
Sizing the Fraud for Profit Problem ....................................................................... 13
B.
Sizing the Fraud for Property Problem .................................................................. 15
Figure 5-2: Fraud for Property Rate Higher than Reported ....................................... 16
C.
Many Industry Changes Have Unintentionally Accelerated Fraud ......................... 17
D.
The Type of Misrepresentation and their Relative Sizes ....................................... 21
6.
Key Drivers
–
Why Fraud has Increased ........................................................ 22
7.
What Does Fraud Cost the Industry ............................................................... 25
A.
Current Estimates miss the mark .......................................................................... 25
B.
Our Estimate of Fraud Losses and Industry Revenue ........................................... 26
C.
Lower Reserves will Compound the Problem ........................................................ 28
8.
Combating Fraud
–
Prevention over Prosecution ........................................... 29
A.
The Laws Pertaining to Mortgage Fraud ............................................................... 30
B.
State Licensing & Registration .............................................................................. 31
C.
Product Regulation ............................................................................................... 32
D.
Beating the Beast in house
–
the critical Components .......................................... 32
i.)
Selective hiring and Training ............................................................................. 33
ii.)
Due Diligence
–
The Role of Common Sense in Processing ............................ 34
iii.)
Fraud Detection Technologies .......................................................................... 36
iv.)
Know your Partners .......................................................................................... 39
9.
Conclusion ...................................................................................................... 41
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