More steps taken now to verify income
Mortgage fraud have been present in the lending system for a long time now. There's many different tricks that savvy crooks have been using in order to try and fool the system. Sometimes it works, sometimes it doesn't, but what's sure is that in the past, it used to be pretty hard to catch. The problem was the lack of information, people claiming things that were just hard to verify, and financial institutions not having the resources to do extensive checks every time.
If someone were to say he or she earns $100,000 per year, from a variety of sources, it's hard to be completely sure of the budget presented. That's especially true if more than one person is involved, like a corrupt employer or loan officer. Banks have routinely lost thousands of dollars per case when people left with money, never to be heard from again. However, as technology evolves and the Internet becomes a place where every type of information can be found, it's becoming much easier for auditors to do all kinds of background checks, and that's exactly what they're doing.
Banks doing more background checks
The checks are rarely done right there during your interview. Instead, specialized auditors are doing those verifications in the background, just before the loan closes. In some cases, for some banks, every single loan application is verified, rather than just a sample like they used to do. A simple call to the person asking for the loan, trying to catch them in a lie, or a call to employers, can often be enough to find suspicious applications. There's firms that now exist to do nothing but background checks, and banks are hiring them in order to save money by rejecting fraudulent claims. If someone claims to be able to repay the loan thanks to a substantial income, but that turns out to be false, there's a good chance that the bank or financial institution would lose money on that case. So instead, they rely on those firms to find out the truth.
And now, thanks to the Internet, these auditors have access to sophisticated databanks of information. They know instantly the background of many people, and can establish links for those that aren't in the system. Thanks to various Internet sites and services, these auditors can build a profile, and see if it matches what the applicant said. For example, it's easy to find the type of work someone does. From that, the salary can be estimated, and whether the income figure makes sense or not.
Public records reviews more common
Public records are also looked at, such as past convictions or criminal offenses. But these systems go much further than that. Platinum Data Solutions, for example, is a service that builds links between various people, so that links can be found between the buyer and the seller, to see if they are working together in order to commit fraud. DRI Management says it will deliver credit reports, automated bankruptcy notices and up-to-the minute lien watch services, all within 60 seconds.
So it's a bad time to be a mortgage fraudster, since all the tools are now there and available for auditors and financial companies to catch them in the act, and it becomes easier every year to do so. Thanks to these tools, all the tricks that bad guys use to try and get money are being exposed and found out, saving millions in lost loans.