Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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United States Government Accountability Office GAO

Report to Congressional Requesters

MORTGAGE FORECLOSURES Documentation Problems Reveal Need for Ongoing Regulatory Oversight


As of December 2010, an estimated 4.63 percent of the about 50 million first-lien mortgages outstanding nationwide were in some stage of foreclosure—an increase of over 370 percent since the first quarter of 2006, when just 1 percent of mortgages were in foreclosure.1 Requirements for proceeding with foreclosure are largely contained in state laws, and some states require the party seeking foreclosure to prepare documents that are notarized or signed by someone with knowledge of the case and submit them to a court. Beginning in September 2010, several servicers announced that they were halting or reviewing their foreclosure proceedings throughout the country after allegations that the documents accompanying judicial foreclosures may have been inappropriately signed or notarized. The servicers subsequently began resuming some foreclosure actions after reviewing their processes and procedures, but following these allegations, some homeowners have challenged the validity of foreclosure proceedings brought against them. In other states, foreclosures may be processed without the involvement of courts, but challenges to the documentation associated with foreclosures can occur and are occurring in these states as well. In addition, questions over whether documents for loans that were sold and packaged into mortgage-backed securities were properly handled have prompted additional challenges regarding whether the parties filing for foreclosure have the necessary authority to do so.2 In response, numerous federal agencies have initiated reviews of foreclosure practices at major servicers. Additionally, state attorneys general are engaged in a review of servicers’ foreclosure practices.


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