Tag Archives: FBI

New Form to Prevent Mortgage Fraud

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This morning I received an email from one of the major banks we work with recommending the use of a “FBI fraudOccupancy Cert”.   They are recommending the use of this form on any loans we sell to their bank, including owner occupied, investment or second homes.    The form, which must be acknowledged by the borrower, states:

“Mortgage Fraud is investigated by the Federal Bureau of Investigation and is punishable by up to 30  years in federal prison or $1,000,000 fine, or both.  It is illegal for a person to make any false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution.”

The borrower must then select the occupancy for the specific property that is being financed:

  • Primary Residence – Occupied by Borrower(s) within sixty (60) days of closing as stated in the Security Instrument I/we excuted.
  • Second Home – To be occupied by the Borrower(s) as a second home (vacation, etc) while maintaining principal residence elsewhere.
  • Investment Property – Not occupied by Borrower.   Purchased as an investment to be held or rented.

Directly above the signature line, the form states:

“I/we acknowledge it is illegal for a person(s) to make a false statement regarding occupancy of property being financed in a loan and credit application and that we are subject to prosecution under Section 1001, 1010 and 1014 under Title 18 of the United States Code”

This document seems to make it crystal clear what occupancy is and the potential risk of trying to finance an investment property as owner occupied or as a second home.   Can something so direct make a difference and curb mortgage fraud?

Any guesses as to if the BOA buyout of Countrywide will still happen?

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CNN is reporting this morning that Countrywide is now the subject of an FBI investigation into their lending practices. Countrywide is suspected of engaging in “widespread fraud…which may have contributed to the subprime mortgage crisis that has rocked the U.S. economy.”

fbi 1The FBI will investigate Countrywide’s underwriting practices, the way loans were originated and their accounting representations to shareholders in regards to subprime loan losses.

I wonder if there are more whistleblowers ready to share what they know, or perhaps they already have which is what prompted the investigation.

This makes me believe that we are going to see many, many, many lenders in the next several weeks coming clean very fast about any accounting irregularities that they might have been trying to delay.

In addition, watch for underwriting guidelines to FURTHER tighten and expect that all publicly traded companies to come out with new “best practices” guidelines for all employees and third party originators. The big question is, will the new best practices guidelines will apply to senior management?

I’m trying to imagine what it would be like to be a Countrywide employee today, facing the possibility of being interviewed by the FBI.