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.
