Hello, LOs!
What happens when the underwriter, whose sole job is to assess risk, is unqualified to do the job?
I don't mean he or she is underperforming, takes too long a lunch break, naps when they shouldn't, or makes the occasional error. I mean literally unqualified – a complete fraud.
HousingWire's senior mortgage reporter Georgia Kromrei and I have been chatting with industry sources who say it isn't as rare you might think.
In fact, scammers managed to obtain jobs as underwriters at mortgage lenders across the country last year during the height of the hiring frenzy, the sources, who each requested anonymity, told HousingWire.
Typically, the fakers would set up a fictitious employment website with what appeared to be a real company. They'd also have phony resumes with what appeared to be pertinent past experience, and a series of fake references who could vouch for their qualifications.
In the rush to hire qualified underwriters, some small and regional lending shops didn't have strong screening and vetting processes set up to catch scammers, sources said.
The applicants appeared to be part of a larger workforce scam – they were often well coached and had some knowledge of the industry, though it wasn't universal. The scam attempts were most prevalent during the summer of 2020.
"We had some people slip through, too," said one recruiter source. "They get their equipment, then they disappear. We had a case where an underwriter got placed, were hard to get in touch with and then they said, 'Hey, I moved back to Africa.'"
Another source, who runs a mortgage industry staffing firm, said his company's aptitude tests weeded the scammers out pretty early.
"The tests, they can cheat on them but it's very difficult because it's timed and you need to know the material. Somebody who says they have eight years of underwriting experience and they score a 20, well there's no way that person has any experience," he said.
The organizers of the scam must have thought that in a remote environment, they could go to a loan officer who could help with whatever comes up, one source said to HousingWire.
Some of the scammers managed to collect underwriter salaries for two months before the jig was up, sources said.
The mortgage industry recruiters said they haven't seen this type of resume fraud issue in months, but are on the lookout for it popping up again.
LOs – have you seen this happen at your lending shop? Did you work with a phony underwriter?
We plan to do a story on the implications for mortgage lenders. Investors generally do not like buying loans underwritten by frauds.
If you have any stories to share, please email me at jkleimann@housingwire.com. I will absolutely keep your identity anonymous.
Thanks, see you tomorrow!
James Kleimann
Managing Editor, HousingWire
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