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Freddie Mac: Stay Vigilant About Fraud as the Housing Market Springs Forward

On April 30, Freddie Mac issued a release encouraging sellers and servicers to continue watching out for fraud within the mortgage industry.

Stay Vigilant About Fraud as the Housing Market Springs Forward

The housing market is heating up this spring, with good news about market demand, interest rates, and a mortgage industry ready to handle large numbers of buyers and sellers.    

Freddie Mac’s Deputy Chief Economist Len Kiefer recently outlined the top three reasons [pdf] why he predicts the best year for home sales and new home construction since 2007. But don’t let the positive news and change of seasons change your approach to fraud. While known instances of fraud may be at historic lows, fraud remains a threat and a cost to the mortgage industry, and fraud programs need to be maintained and possibly strengthened.

Keeping the Focus on Fraud Prevention

The mortgage industry has spent the last several years focused on building itself back up and instituting best practices to fight fraud. It’s almost human nature to let down your guard and not focus on fraud prevention tactics when things are going well. But that’s precisely the time when you should keep your eyes out and ears open.

Instances of some types of fraud, such as appraisal fraud, appear to have decreased. But others, such as the number of falsified loan applications – now the most common type of mortgage fraud – have risen steadily for the last three years, according to The New York Times.

Loan-Level Fraud on the Rise

While no single fraud scheme is splashed across the news headlines right now, our industry is tested everyday by loan-level challenges. A borrower who’s unemployed at the time of closing obtains a loan because a lender skips verbal verification prior to closing. A lender misses a mortgage or other debt listed on a credit report, which was not disclosed on the loan application. A borrower misrepresents his assets and promises down payment money he doesn’t have in order to secure his loan. It’s worth noting that, as the industry evolves, so do fraud trends.

Loan by loan, the costs for loans that don’t perform well add up. Additionally, fraudsters use loan-level frauds to test our controls and as building blocks for larger, potentially more damaging fraud schemes.

Fraud Prevention Resources for You and Your Organization

What can you and your organization do to prevent and report fraud? One step is to refresh your knowledge of best practices by reading our comprehensive Single-Family mortgage fraud mitigation best practices document [pdf]. The Freddie Mac Financial Fraud Investigation Unit (FFIU) recently updated these fraud best practices to help you spot what to look for, how to report fraud or suspected fraud to Freddie Mac, and what steps you can take to help prevent fraud.

Freddie Mac’s SVP and Head of Single-Family Sales & Relationship Management Christina Boyle recently wrote about The 4 Cs of Qualifying for a Mortgage, including capacity, capital, collateral, and credit. Your attentiveness helps ensure that there isn’t a 5th C – Crime.

Looking Forward to Continued Success

The FFIU is at the forefront of our mortgage fraud mitigation efforts and is committed to helping the mortgage industry fight fraud. 

Your continued efforts toward fraud prevention, detection, and reporting are critical in the fight against fraud. Thank you for your vigilance.

For More Information

Please click here to view the release online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

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CEO

Alan Jaffa

Alan Jaffa is the Chief Executive Officer for Safeguard Properties, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to Chief Operating Officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur Of The Year® Award finalist in 2013.

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Esq., General Counsel and EVP

Linda Erkkila

Linda Erkkila is the General Counsel and Executive Vice President for Safeguard Properties, with oversight of legal, human resources, training, and compliance. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, risk mitigation, strategic planning, human resources and training initiatives, compliance, insurance, litigation and claims management, and counsel related to mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. She has practiced law for 25 years and her experience, both as outside and in-house counsel, covers a wide range of corporate matters, including regulatory disclosure, corporate governance compliance, risk assessment, compensation and benefits, litigation management, and mergers and acquisitions.

Linda earned her JD at Cleveland-Marshall College of Law. She holds a degree in economics from Miami University and an MBA. Linda was previously named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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COO

Michael Greenbaum

Michael Greenbaum is the Chief Operating Officer of Safeguard Properties, where he has played a pivotal role since joining the company in July 2010. Initially brought on as Vice President of REO, Mike’s exceptional leadership and strategic vision quickly propelled him to Vice President of Operations in 2013, and ultimately to COO in 2015. Over his 14-year tenure at Safeguard, Mike has been instrumental in driving change and fostering innovation within the Property Preservation sector, consistently delivering excellence and becoming a trusted partner to clients and investors.

A distinguished graduate of the United States Military Academy at West Point, Mike earned a degree in Quantitative Economics. Following his graduation, he served in the U.S. Army’s Ordnance Branch, where he specialized in supply chain management. Before his tenure at Safeguard, Mike honed his expertise by managing global supply chains for 13 years, leveraging his military and civilian experience to lead with precision and efficacy.

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CFO

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard Properties. Joe is responsible for the Control, Quality Assurance, Business Development, Marketing, Accounting, and Information Security departments. At the core of his responsibilities is the drive to ensure that Safeguard’s focus remains rooted in Customer Service = Resolution. Through his executive leadership role, he actively supports SGPNOW.com, an on-demand service geared towards real estate and property management professionals as well as individual home owners in need of inspection and property preservation services. Joe is also an integral force behind Compliance Connections, a branch of Safeguard Properties that allows code enforcement professionals to report violations at properties that can then be addressed by the Safeguard vendor network. Compliance Connections also researches and shares vacant property ordinance information with Safeguard clients.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.

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Business Development

Carrie Tackett

Business Development Safeguard Properties