“Willful Blindness” - Mortgage Consulting and Litigation Services-

Jan. 23, 2011 - PRLog -- Preventmortgage.com announces, Mortgage Consulting and Litigation Support Services-

The right mortgage expert can make all of the difference in your success in your case.  

We investigate mortgage files for mortgage fraud, predatory lending practices and real estate fraud, and offer opinions based on industry standards and practices. You should Choose wisely and choose someone who is credible and understands.

Michael S. Richardson is actively involved in current mortgage origination, quality control and other mortgage related services.  He is completely up-to-date in all areas of regulation, standards, and accepted practices.

Michael S. Richardson has a personality that commands respect.  He presents easy to follow point of view in a relaxed style and has worked in stressful situations throughout his professional career.  He knows how to stay on point regardless of the maneuverings of the opposition.

Michael S. Richardson is adept a preparing strong written reports in language that is both clear and persuasive.  He prides himself on a review style that is direct and clearly delivers results.

Michael S. Richardson has the skills to provide forensic 3rd party loan reviews and consulting services.  His loan and mortgage knowledge is extensive and is leveraged in discovering abnormalities.

Michael S. Richardson knows that the mortgage industry and transactions have a lot of acronyms and terms that the lay person seldom knows.   He will speak to clearly spell out the nuances of the transactions in simple language that has impact.

Michael S. Richardson understands that you are hiring an expert for a specific purpose and need.  He wants you to be successful and will make sure that his expert review and work delivers your point in a style that you believe will be most effective.

Michael S. Richardson can provide consulting and testimony nationwide with experience in presenting complex and technical matters in a friendly and easy to understand format in the areas of mortgage and real estate fraud, best practices, and lending practices are provided.

Mortgage fraud is insidious; it creeps up on you. Mortgage fraud exists because it’s able to exist. Everyone should know that in any real estate transaction fraud is committed by “misrepresentation or omission” of facts that unduly influence the decision of any other party.

Our job is to consistently and accurately produce results during all of our third-party reviews. The information we present to our clients are necessary to assess risk and make allowing the best possible decisions for each of their portfolios. In order to provide this information we need to have multi- subject matter capability as the mortgage industry is being held to a higher standard of disclosure than ever before.
   
Loan fraud occurs when a lender makes an inappropriate loan, because the property is overvalued or the lender has a false picture of the buyer's financial position. Loan fraud is typically committed with intent; it is not normally requested or asked for by the homebuyer, but by the originator or real estate professional, or both in partnership along with other industry insiders in order for the loan to close and make a profit.

Once a white-collar criminal gets away with it, the process quickly becomes addictive. Success breeds more success, and before long such crafters of fraudulent mortgage loans clearly begin feeling that not only are they above the law but in fact, they are not doing anything wrong in the first place.

In a number of these cases people had “Willful blindness” which is a legal term that skirts the boundary between neglect and culpability. In contemplating the concept of willful blindness, which at its heart expresses the contention that the industry exhibited to obvious fraud by ignoring it for so long at the hands of the fraudsters.

Almost always “Fraud for Profit” involves industry professionals and accounts for approximately 80 percent of fraud. There are generally multiple loan transactions with several financial institutions involved. These frauds include numerous gross misrepresentations including: income, assets, collateral and employment with most of this information backstopped by co-conspirators in order to generate cash proceeds in fraud profits.

Then there is “Fraud for Property” which is about 20 percent of all fraud, also known as “Fraud for Housing” often starts small. A fudged figure here, an incomplete loan application there, an over-generous appraisal, but little do most mortgage professionals recognize that these “little lies” are actually fraudulent information. In fact, fraud is fraud and ignorance does not equal innocence.

One of the most difficult aspects of dealing with mortgage fraud is that it’s hard to know the scope of the problem. The human element that’s involved makes would-be fraudsters hard to spot, and those already committing fraud even harder to identify. Because these people are white-collar criminals, they look, dress, act, and talk just like the rest of us. 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.

Some types of mortgage fraud are often done with the best of intentions, but manipulating contracts, appraisals, sources of down payment, and sale prices to help buyers qualify for a higher loan amount - even if the borrower, real estate professional, suggests it or the lender - is fraud.

Lenders tend not to notice loan fraud unless the loan is going into or in default. . It is too late to prevent fraud after closing, the damage is already done. You can’t go back and make changes to a loan after the fact; although it is never too late to identify fraud.

The problem is that a good number of our colleagues are simply not proactive about identifying, preventing, or reporting fraud. Misrepresentations or omissions may be insidious, but so is its cure, little by little, day-by-day, you need to do your part by consistently become skilled at identifying the misrepresentation’s and fraud during the due diligence process while the loan file is being analyzed.

PMF "Third-Party Neutral" Quality Control Reviews

Fannie Mae’s new Loan Quality Initiative (LQI) mandates:

A Quality Control Plan exhibits the policies and procedures that companies consider the responsibility of every employee.  This plan follows both requirements of key government agencies and primary mortgage investors and is a vital resource to ensure a company’s mission is achieved.

Mortgage Origination needs to be in compliance with Federal and State laws and an effective Quality Control Plan is necessary to ensure that loans are salable in the secondary market and follows Fannie Mae’s Loan Quality Initiative (LQI):

   * Lenders are expected to develop and maintain a QC program that meets Fannie Mae requirements.
   * Lenders’ QC plans are required to include a Prefunding review process.
   * Implementing and maintaining re-verification and review procedure
   * QC loan selections must be made within 30 days of closing, and review must be completed within 60 days of selection (previously 90 days). Lenders must notify Fannie Mae if their QC cycle is behind by more than 30 days
   * Results from the Lender’s QC audits/reviews must be reported to Senior Management within 30 days after the completed review/audit.

A Quality Control Plan can be labor intensive and costly if not developed thoroughly or not implemented strictly.  Make sure your Quality Control Plan is complete, your employees are trained, and your internal control audit and compliance checks on loans are proving the quality control standards set in place.

Michael S. Richardson
Managing Director-Chief Quality Officer
www.preventmortgagefraud.com
michael@preventmortgagefraud.com
Author of "An American Epidemic, Mortgage Fraud a Serious Business"

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Mortgage Origination “Third-Party Neutral” quality control is required to stay in business, to avoid unacceptable risk for your company, the correspondent investors and all governmental agencies. We investigate mortgage files for mortgage fraud, predatory lending practices and real estate fraud, and offer opinions based on industry standards and practices.