Willfully Blind or Proactive Professional?

AMBA 411 Fraud and Crime Conference keynote speaker Jeremy Nicholls asked mortgage industry professionals if they actually assess documents they process. It was a great question. On a fundamental level, mortgage fraud involves a misrepresentation to a lender, which typically starts with a potential borrower submitting documents to a mortgage professional.

While a mortgage professional may not be required to verify all supporting documentation, does that mean they can turn a blind eye to an apparent inconsistency? Does it mean they simply act as a messenger and not look at the documents?

It may be something as simple as recognizing spelling errors on a bank statement or an overall feeling that a letter of employment isn’t legitimate. These may not prove any sort of mortgage fraud scheme is taking place, but they are red flags that should be examined more closely. Seek advice from your broker. The brokerage may want to notify the lender of its concerns. Mortgage professionals have a responsibility to be actively engaged in reviewing documents to ensure they are reasonable. They cannot be willfully blind to obvious issues or inconsistencies.

This same principle applies to all industry professionals. Is your conduct that of a proactive professional, watching for mortgage fraud red flags and assessing the transaction, clients and all third parties? Or does your conduct reflect a professional who is ignoring fraud red flags to ensure a deal closes?

Professionalism is contagious. If you are a proactive professional, spread that attitude and commitment to your peers. Share your experiences and knowledge.

If you are one of those industry professionals who ignores warning signs, it’s time to ask yourself how you’d feel if you found out you participated in mortgage fraud. How would you feel if such participation damaged your reputation and your career? And finally, do you want to be a better professional?

The fact is, being willfully blind to a mortgage fraud scheme could affect your reputation and your career. The good news is it’s never too late to become more professional. Seek out a mentor, educate yourself and learn from your peers on how recognize signs of mortgage fraud.

Another good place to start is the Guidelines for Mortgage Broker/Associate Originated Applications, the Mortgage Fraud Checklist available on RECA’s website, and RECA’s Mortgage Fraud Information Bulletins.