Corra Daily Planet » 2010 » January

Mortgage Loan Originators to Undergo Background Checks

Fri, January 29th, 2010 - 5:37 am - By Gordon Basichis

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There are things that come in a nick of time, and there are things that come a little too late.  As a background checking service that conducts business research and corporate investigation, we have had certain clients ask us to explore certain issues related to mortgage fraud.    In conversation and after conducting research, it is apparent that  part of the mortgage fraud scandal was originated by the lenders.

To be clear, in the case of mortgage fraud, everyone was in on the act.  First the house was flipped back and forth behind two conspirators.   They took turns selling the house to each other, back and forth, each time increasing the value of the house.     The real estate agent  artificially pumped up the value of the house.   The appraiser fraudulently verified that the house was worth much more than it actually was.   The prospective buyer who was often a straw person merely put there to pose as the buyer in behalf of the real buyers would falsify documents attesting to salary and net worth far behind his reality.   The real buyers paid him off to do this.  A nice cash reward for a few days work.    And then of course Wall Street brokers packaged these falsely appreciated mortgages into derivatives and sold them off to the speculators.

Everyone was happy.  And then the housing market was so overheated, like a game of musical chairs, payments were late, the mortgages turned  toxic, and the rest is history.  So now, according to an article in RealEstateRama,  The Nationwide Mortgage Licensing System and Registry, known as the NMLS,  will require background checks through the FBI as part of the state application process.    Officiating bodies in all states will be able to review the background check through the NMLS.

This is a proactive move and a sound one.   Probably, things being what they are, these criminal background checks should have been mandated long before.  How much the criminal records searches would have prevented the surfeit of mortgage fraud is anyone’s guess.   But at least now the process is being modified and some of the gaps in security are being corrected.

We applaud the NMLS for taking this action and encourage any other licensing body to do the same, if they are not doing so already.

Check them out before you hire.

Beware of Diploma Mills and Employment Mills for Background Checks

Thu, January 28th, 2010 - 5:03 am - By Gordon Basichis

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Have you ever conducted a background check and noticed that your employment candidate lists as his college background some obscure college or university?  Have you noted, too, that sometimes a candidate will list as a past employer some obscure IT group or business that doesn’t sound quite right?  That’s because the college in question may be a diploma mill, and the employer in question may be what amounts to an employment mill.

What are diploma mills and employment mills?   Simply put, the diploma mills issues a graduation certificate that isn’t worth the paper it is printed on.   The diploma from a diploma mill comes form either an non-existent college or university or one that has its only presence on the Internet and lives only in the mind of its creators.   For a few hundred bucks, or whatever the market will bear, a diploma mill with provide a Bachelor’s Degree, where the candidate is credited for “life experience,” whatever that is.    For a few bucks more the alleged student can obtain a master’s degree or bachelor degree.   No classes are offered, not even online, and there are no teachers.  Sometimes, in the more elaborate set ups, the supposed student might have to answer a round of questions, before being awarded his degree.

The employment mill is a bit different, but still fraudulent.   The employment mill is a front.  It is an online site that provides employment verifications for companies that do not exist.   The employment mill will provide pay stubs, if necessary and if the price is right, or any other documents that substantiate your job candidate’s claim that he actually worked for this company.   You will receive the start dates, end dates, position held, and sometimes even the salary.   It all looks good.  I should.  The employment candidate paid for the company to verify his employment.   The only thing is, the company your candidate supposedly worked for is total fiction.

There are hundreds of diploma mills and employment mills.  Many are based in India, but there are a fair number in the United States.   When you are running background checks it is sometimes difficult to determine if a university or an employer is for real or not.   Corra Group researchers are generally familiar with most diploma mills and we have the ability to conduct business research to determine if the employer is actual or another fiction.   Realize that with passing time the mills become more sophisticated and work hard to camouflage their fraudulent practices.   Having the tools to conduct a more thorough business investigation enables us to route them out.

So be careful.  Diploma Mills and Employment Mills are growth industries and prey on those who conduct pre-employment background checks.    More about this later.

Professional Basketball and Background Checks

Wed, January 27th, 2010 - 5:03 am - By Gordon Basichis

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The Detroit Pistons are up for sale.   It may be a tough sale in a declining market.   The other consideration, according to the article in the Detroit News is that the team, like other NBA teams on the sales bloc may choose to move to a new location.   That is if the team can be sold.

No one expects the team to get its asking price.   I supose hard times have fallen on every business, even professional basketball, in this tough economy.   Twelve teams reportedly lost money last year.  The vlaue of some teams has declined by close to fifteen percent of their former value.

And interesting point here.   Before a team can be sold, the National Basketball Association, or NBA,  mandates that they must approve the financial agreement and that the buyers must undergo the requisite background checks.   The new ownership will also need two thirds approval by the League’s Board of Governors.

It is something to keep in mind when you are thinking about buying and selling your business.   Or, if you are planning on entering into co-ventures or strategic partnerships, you may want to conduct the necessary business research that requires background checks.   You should order business credit reports on the entity, and conduct criminal background screening and civil background checks on the principals of the company.   This may well save you money, time, and the embarrassment of having been lulled into a fraudulent or unsavory situation.

The NBA mandates background checks in order to help protect the franchise and the League’s reputation.  It is wise for you to do the same.

Background Checks Over Phone

Tue, January 26th, 2010 - 6:59 am - By Gordon Basichis

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Now background checks can be ordered just like a pizza.   Just order them over the phone.   According to an article in PC World,  BeenVerified has stirred up a lot of controversy by enabling users to order up to three background checks, monthly, over the IPhone.  Turnaround is a matter of seconds.

A good thing?  Some say no.  Critics claim it violates privacy.   As the application is the results of a proprietary database, the user can conduct background reports on everything from criminal records, social media links, property records, to the subject’s residential history.  Over one million background checks have been run so far on the application.

It is a handy application.  Is it for preemployment screening purposes?  I wouldn’t think so although the claim is made it is adequate for small and medium sized businesses.  As the application will return records on anyone possessing the same name, it becomes hard to week out an employer’s job candidate from the other 900 Joe Brown’s that are out there.  You can make a mistake and refuse to hire someone who really had no violations on his record.    With regard to social network information, once again there are many members with the same or similar names.  Separating one from another has to be tricky.  Finally, again in being compliant with the FCRA, to initiate preemployment background checks, it is mandated that the employer must have a signed consent form from the job applicant.

There is also the issue with Fair Credit Reporting Act (FCRA).    With the FCRA, should you discover criminal records on a database search, you are supposed to verify with a county criminal search, or state non-database search.  These background checks return more accurate records.     For higher level preemployment screening and for more senior employment candidates, it is really necessary to conduct more complex searches, and it doesn’t appear that the IPhone application would allow for that.

This all being said, I can see where this would be handy for singles and couples looking to date.   Parents who want to know more about the parents of their child’s playmates would find this application invaluable.    As for the controversy about the invasion of one’s privacy, I always find that overblown.  These are public records, and by the very name and nature, public records are supposed to be accessible.

This issue will be interesting to watch.

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