Employment and income fraud is nothing new to Mortgage Loan Originators. If you’re in the business long enough, you’re likely to encounter at least one client whose account of their income and employment proves to be, shall we say, less than truthful. The good news is that advances in mortgage technology and process automation since the crash of 2008 have made it more difficult for borrower income and employment fraud schemes to succeed.
New Hire Scams
If you’ve studied mortgage fraud, you know that it is constantly adapting to changing market conditions. Given the unprecedented nature of the past 12 months in the mortgage industry – and indeed the entirety of global society – it should come as no surprise that fraudsters have been looking for new angles of attack on the financial system. One such scam that hasn’t received a lot of publicity (yet) is a new twist on the old employment fraud trick, and it’s targeting HR departments at mortgage companies of all sizes in an attempt to gain access to sensitive borrower data.
Simply put, criminals know that our companies have been dealing with volume-related operational constraints, especially in the underwriting and processing arenas, and most have been in the market to quickly hire new talent to reduce turn times. So, they’re creating resumes with falsified employment history and applying for open positions in the processing and underwriting departments of residential mortgage lenders. They’ve brushed up on buzzwords and industry terminology in the hopes that they can get through the interview process (which itself has changed dramatically and is now largely virtual in many firms) and start work which will give them access to borrower financial and personal information that they can either use to commit identity theft or sell to others to do the same. I have personally heard from multiple people that have either been victimized by it or work for companies whose names are listed in bogus work histories on resumes.
What Can I Do to Protect Myself?
Step 1: Awareness
If you’re an owner, sales manager, ops manager or HR professional at a company that is hiring, the first thing you need to do is immediately alert your recruiting and hiring team about the scam.
Step 2: Verification
If you’re not already doing so, your company needs to verify ALL recent work history for applicants you intend to hire. Just make sure to do it in a manner that is compliant with employment law and regulation in the state(s) in which you’re hiring. (Remember that some states prohibit collection of previous salary/compensation information in the hiring process, so don’t request copies of W-2s or paystubs where prohibited.)
Step 3: Control
Finally, if you have not already done so, please implement tight team and/or role-based access control measures for your Loan Origination System (LOS) so that only those employees with a legitimate reason to access a borrower file may do so. If you’re unsure about how to do this, please consult your LOS provider and/or an IT security company that can help. Given the massive regulatory focus on data and cybersecurity, you can’t afford not to do this even if you’re a small company and/or not currently hiring; just remember to update your Gramm Leach Bliley Act safeguards policy when you’ve rolled out any changes.
I hope that 2021 is treating you well and I look forward to seeing you for CE later this year.
Happy originating!
Peter
Real Estate Institute offers NMLS-approved Mortgage Loan Originator Pre-License and Continuing Education courses in three formats: Classroom, Live Webinar and Online. These courses were designed BY loan originators FOR loan originators covering topics you need to know to navigate today’s ever-changing lending landscape. Please don’t hesitate to contact us online or at 800-995-1700 with any questions about loan officer training or requirements.
