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The toll fraud has taken on the mortgage business has been described as epidemic.

Lenders suffer tremendous financial losses when loans go sour because someone in the process has committed fraud, losses that some experts have estimated to be in the billions of dollars each year.

No wonder, then, that a fraud awareness seminar sponsored the Mortgage Bankers Association last December was sold out and another one schedule for next month is filling up rapidly.

But as it turns out, lenders aren't the only ones in the mortgage process who are reeling from a greater incidence of fraud. So are the three major credit reporting repositories.

In fact, last year's record loan volume spurred a similar increase in requests for credit reports from Experian, Trans Union and Equifax. But the jump in activity has come at a price.

"Fraud is one area we're really struggling with," according to Terry McComas of the Dallas-based Experian, who says credit reporting activity at his company for the last five quarters is running 25 percent-30 percent higher than normal.

McComas said at the National Home Equity Mortgage Conference in Boca Raton last month that his business is "being targeted" by crooks who see it as "just another avenue" to hoodwink mortgage lenders.

Like lenders, Experian sees fraud from within its own organization as well as from outside.

When the credit agency discovers that an employee has tampered with data in a file, according to McComas, it calls in the police, who march the worker out of the office in handcuffs in front of everyone else so all can see the consequences of such an illegal act.

The firm also is seeing a higher incidence of cleverness on the part of con artists. In one of the more recent schemes Experian has discovered, crooks are calling in "bad trade lines" on fictitious customers. That is, they are reporting that a non-existent client as not paid his bills on time as promised.

Next, the crooks report that the imaginary client has cleared up his problems and brought his account up to the "as agreed" status. And shortly thereafter, they apply for a mortgage or other line of credit under the fictional client's name.

"We've seen an extensive amount of (such) activity over the last 12 months," said McComas.

This kind of skullduggery is usually difficult to undercover. But thieves tend to trip themselves up by becoming impatient and reporting that the mythical client has cleaned up his act too quickly, the Experian executive reported.

"When a new trade lines is reported as a bad one month and as an 'as agreed' the next month," he said, "that's usually a red flag that something's amiss."

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