Beware of Fake Employers Posing Threat to Your Loan.

By Curtis Knuth

FANNIE MAE ENCOURAGES LENDERS TO SCRUTINIZE EMPLOYER INFORMATION WITHIN THE LOAN FILE.
If you’ve never visited Fannie Mae’s mortgage fraud prevention page, I highly encourage you to do so. You don’t need to be an underwriter or risk officer to appreciate this resource; and it’s important for vigilance throughout your lending shop.


Front and center on their web page, Fannie Mae alerts lenders of 10 fraudulent employers identified within Northern California in July, and that's in addition to the 35 found in Southern California in May. Fannie attempted to re-validate the employer information supplied on suspect applications and other supporting documents,  i.e. pay stubs, etc. When researching the employer for a verification of employment, several of them are listed within yellowpages.com and have other online references. They also have legitimate phone numbers and automated call centers. Most likely this falsified information is caught in QC; otherwise, the loan could have turned into an EPD (Early Payment Default) or other financially negative scenarios for the lender.
Prudent origination, processing, and underwriting practices should include looking for red flags in the loan documents that raise questions about the transaction. -Fannie Mae
Fraudsters setting up fictitious employment verification call centers and consumer employment services are not new. Additionally, organizations exist that provide fake employment services for consumers in a variety of scenarios, i.e. job history verification. Google CareerExcuse.com (which incidentally happens to be located in Northern California). I don't recommend navigating to their website, but look at the Google search description and review the YouTube results if your shop permits that activity.

In a 2015 Al Jazeera America interview, CareerExcuse’s founder William Schmidt explains how his firm has set up over 200 virtual employers for his clients to lay claim as references.

Mortgage lenders, it’s good practice in your vendor review for VOE services or in review of internal verification policies -- make certain that the procedures to validate the applicant's employer are robust. Look out for red flags regarding the name, address and telephone number by using multiple data sources, and don't depend upon a simple Google search. In the example of the employers Fannie Mae could not validate, several of them listed legitimate addresses, had legitimate phone numbers and call attendants (I called a few) and had information on file with the Yellow Pages.

I want to plug NCS' VOE solution, as this is a data validation point our team spent significant time researching during development and continues to refine as new schemes appear and old ones are reinvented.  NCS' VOE platform retains and gathers records on fake employers and utilizes both public and paid resources to validate employer information. Rather than an ancillary function, employer validation is critical in VOE and should be scrutinized in a vendor review. 

Ability to repay, or capacity, is core to the “three C’s of credit”; character, capacity, and capital. I would encourage you, or the appropriate party at your shop, to confirm you have appropriate controls around this important data validation point. Make sure your applicant's employer is legitimate

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