The mortgage industry is getting used to all the Chicken Little warnings about fraud, but few have heard quite the proclamation of virtual surrender recently offered by two high-level individuals involved in the business.

Bruce Morris, executive vice president, quality control, Saxon Mortgage Services, Glen Allen, Va., said deception has advanced so far, so quickly that, “every portfolio in the country has fraudulent loans in it.”

Speaking at a Texas Mortgage Bankers Association event in Dallas earlier this month, Morris complained that too many industry members tolerate fraud. “We are our own worst enemies, believe it or not,” he said, demanding that “we can’t have a tolerance for it, we just can’t.”

Speaking not for name attribution, one lender executive at the meeting said he had been disheartened to hear directly from more than one mortgage company that they “were not going to slow anything down,” a reference to production that might be affected by questioning potential fraud. The companies insisted they were “going to run it right on through [because]

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