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BACKGROUND
Association of Certified Fraud Examiners
Mortgage fraud continues to threaten the health of our nation’s financial markets and economy. Anti-fraud professionals are needed to combat this global problem. The Association of Certified Fraud Examiners (“ACFE”) is the world’s largest anti-fraud organization with nearly 80,000 members who are committed to reducing business fraud worldwide. The ACFE provides anti-fraud training and education to its members and businesses across the world. As part of their anti-fraud efforts in the mortgage markets, the ACFE provides training and exams in the area of mortgage fraud. One such training course was developed that is titled “Understanding the Basics of Mortgage Fraud.” In this course, ACFE members explore the history of the mortgage industry and its role in the global financial crisis and examine the life cycle of a mortgage loan to identify potential areas for fraud and learn techniques to recognize red flags of common mortgage fraud schemes and methods for prevention. One such scheme is the focus of this report that I have been writing and warning about for two decades. It’s called the “Double-Pledge” or “Double-Sale” loan and note scheme where a borrower’s promissory note and loan are sold, transferred, or pledged to more than one lender. In Understanding the Basics of Mortgage Fraud, the ACFE writes the following:
Fraud Trends Involving Lenders
A scheme used by lenders to raise capital is to the sell the same mortgage loan to more than one secondary-market investor; this scheme known as the double-sold loan. The original loan documentation is duplicated and sold more than once in the secondary market. To conceal the scheme, the lender remits the scheduled principal and interest payments to the servicer. Since all loans remain current, the borrower is not aware that his mortgage has been double-pledged unless one of the loans goes into foreclosure.
Red flags for this scheme include:
• Someone other than the borrower is making payments on the loan.
• The borrower receives late notices or tax invoices on more than one loan.
• The borrower notices more than one loan on his credit report.
• The lender fails to provide the note to the document custodian.
Final Double Pledge Report by DinSFLA on Scribd
© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.
Can you help me on this?
My mortgage loan was with HSBC in 2006. None of the 4 red flags show up in this situation, but I have another one that could point to this problem or something else. We got the loan and were told to come back in 3-5 months after making payments on time and they would refi us into a better interest rate. We returned 5 months later, after making all our payments on time. They denied us….they told us that our debt to income ratio was way too high. Funny though, our income was just the same, and we had not taken on any additional debts, since we were approved for the loan 5 months prior. So I asked what had changed. As it turned out, they included the HSBC mortgage loan twice when they figured our DTI. There were two separate account numbers and two balances—one of them showed the original loan balance and the other one showed the current balance that matches exactly with my monthly statement on this loan for that month. There were two loans. I pressed the issue as to why there were two loans showing, and they told us that because it was a joint loan, both me and my spouse were liable individually to pay….so, if one of us stopped paying the other one would have to pay. They said that since each of us were liable separately, that they had to include it twice. That makes literally no sense. Also, my originating paperwork all had one account number on it. Within 2 weeks of us getting funded for the loan, the account number was changed to the one that appeared on every monthly statement. But 5 months later when we tried to refi, both the old and the new account numbers showed up under our debt obligations. The old one is the one that all payments appeared to have been applied to, as the balance matched our monthly statement. The new one–which shows up on every monthly statement, showed the original balance to the penny and no payments ever made on it. I still have the original papers, the loan application from 5 months later, and all monthly statements. Does this sound like double-sale? Or does it sound like something else?