Mortgage fraud generally occurs when someone manipulates the facts to work in their behalf or purposefully defrauds both lenders and buyers for financial gain.
Identity theft and mortgage fraud together is the perfect crime. Identity Theft and Mortgage Fraud are like peanut butter and chocolate. They go great together. There are a few types of identity theft when it comes to mortgage fraud.
• A buyer poses as someone else to obtain a home to live in
• An identity thief poses as a buyer to flip a property and keep the proceeds
• An identity thief poses as a seller to sell a property and keep the proceeds
• An identity thief poses and an owner and refinances a home and keeps the proceeds
• An identity thief poses as a mortgage professional, appraiser, real estate agent, attorney or any other professional involved in a real estate transaction using their professional credentials specifically to defraud someone out of their money and do it undetected.
In each of these scenarios someone along the line suffers a financial loss whether directly or indirectly when their good name and reputation is smeared as a result of an identity thief. Often, due to a fundamentally flawed system of identification, the thief isn’t caught.
Identity theft will continue to fuel mortgage fraud for 4 reasons:
• The social security number has become our national financial identifier available in thousands of places. Anyone who accesses those none numbers can commit mortgage fraud under your name.
• Our system of identification provides little to no security due to advances in technology. Anyone with a PC, scanner, printer or just an internet connection and credit card can become anyone at any time by creating or buying a fake ID.
• Till this day, we still have not properly identified who’s who. Until biometric technologies are incorporated into the system of identification, which is at least 10 years away, anyone who decides to become someone else can, simply by adopting that person’s identity through forged paper work and a little social engineering.
• Credit, and the way the system is set up, is wide open. Our credit is open to anyone who obtains our social security number. Once they have our SSN, then they simply access and open accounts using our credit with little resistance.
Due to wide open credit, the SSN as a primary identifier and IDs having no authenticating value, there is zero accountability when it comes to identity theft in the mortgage transaction.
The solutions to eliminate identity theft as a contributing factor to mortgage fraud is to;
1. Support and fully implement the Real ID Act. Congress passed legislation to properly identify citizens requiring multiple forms of authentication when applying for an ID. The critical components of the RealID Act involves the citizen submitting to a biometric scan of a fingerprint that is then recorded and properly identifies the person from then on. This technology, once available, needs to be implemented into the Mortgage transaction every step of the way. No document or transaction should be valid without properly identifying and authenticating the buyer, seller or professional responsible for that next step. Here, accountability will mean something.
2. Support legislation requiring credit freezes across the board. While many in the mortgage and banking industries oppose credit freezes because it will “gum up the system”, a credit freeze is absolutely essential due to our wide open system of credit. Unfortunately, anyone can access credit any time with little resistance. Credit and your financial well being, should be under lock and key and not wide open for anyone at anytime to access effect your credit.
