Fake employers help borderline borrowers qualify for mortgages

Fannie Mae issued its fourth fraud alert in less than three years about California employment schemes.

The Fannie Mae fictitious California employer list started in 2018. With its January fraud alert, the list has grown to 65 companies that appear to be scheming up and down the state.

By Jeff Lazerson

Typically, the borrower and the mortgage loan originator are in cahoots to come up with a fictional job with fictional wages so the borrower can qualify for a home loan.

Ok. Fair enough. But, why is Fannie Mae only naming California employment fraudsters? Surely, the other 49 states have their fair share of crooks.

Is mortgage application fraud trending? As far as I can find, nobody else was banging the trash can lids on crooked mortgage cronies.

And, why not throw the book at the bad guys?

Fannie Mae didn’t respond.

What about Freddie? Not sure. “It’s our policy to not comment on ongoing investigations,” wrote Freddie Mac spokesman Chad Wandler.

The Federal Housing Administration (FHA) isn’t seeing any measurable increases, according to HUD spokesman Ed Cabrera.

Veterans Affairs (VA) does not have any persistent fraud problems. VA has not seen a spike in the last five years in California mortgage application employment fraud. If the VA home loan program suspects fraud, it will refer such cases to the VA’s Office of Inspector General, according to spokesman Randal Noller.

The California Attorney General’s office does not provide information about complaints received and the FBI doesn’t have a clear way to track Fannie Mae referrals.

Whether Fannie is an outlier or the canary in the coal mine on this issue, here are some things to think about when you know you are on the edge of qualifying for a mortgage:

1) Be certain that your mortgage loan originator is a trusted advisor. Check his or her license. Check the licensing of the company he or she works for. You are looking for valid licensing void of disciplinary marks. Check references. Reputable mortgage loan originators are proud as peacocks. They will provide references.

2) If it sounds sketchy, question it. Get as much detail in email form. Run it by the smartest person you know or run it by the smartest lawyer you know.

3) Can you say what you are planning on doing over a loudspeaker? If you can’t, then don’t do it.

4) If somebody tells you the financial upside is worth the risk, or everything is fine or you won’t get caught, just remember when the smack hits the fan everybody always runs to their own corner and points the finger at everyone else.

5) Freddie Mac had a lame but appropriate tagline some years back: Don’t borrow trouble.