Industry News

Loan fraud easier than armed robbery

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"Bank robbery without a gun." That's how Rich Bailey describes mortgage fraud schemes in which rings of realty industry insiders bilk lenders out of millions of dollars each year. Bailey is SVP of New Freedom Mortgage, a privately owned lender in Salt Lake City that does business in 44 states. He's been operating for more than two years as a one-man mortgage fraud detection unit within the company, where he's worked for 17 years. New Freedom investigates fraudulent loans in-house before it turns them over to the Feds because it often can recover funds faster and more easily itself, Bailey said. In most cases, the lender files a civil lawsuit against the perpetrators after he finds evidence against them. The case is turned over to government authorities after a trial is held or a settlement is reached in the civil action. Mortgage fraud is a sophisticated white-collar crime that's been around for decades, but technology has made these scams easier to pull off and enabled fraud to...