An old mortgage scam aims to hijack a payment or two

A mortgage scam in which con artists send letters telling borrowers they should begin sending their mortgage payments to a fictitious company that has begun servicing their loan, is making the rounds again.  Unfortunately, by the time borrowers figure out their loan has not changed servicers, they’ve already sent one or two mortgage payments to the fictitious company.

Making sense of the story

  • According to those familiar with the scam, it typically works because most borrowers are unaware of the rules when it comes to the transfer of mortgage-servicing rights.  Under the law, the current servicer is required to send a “goodbye” letter notifying the borrower that payments should be sent to a new company as of a certain date.
  • A week or two later, the law says the borrower should receive a second letter, which, by law, should include a welcome missive from the new servicer with the details of the mortgage payment – a breakdown among principal, interest, and escrow.  The package also is likely to include a few payment coupons, if not a brand-new coupon book, and self-addressed printed envelopes for borrowers to make payments.
  • Both the goodbye and welcome letter should include the mortgage loan number.  If either letter does not, or if the information included in one doesn’t match what’s in the other, borrowers should call their original servicers to inquire.

Borrowers only receiving one letter should be extra cautious.  Even if everything appears to be standard procedure, borrowers are still advised to call the first company’s toll-free number just to be sure.


The handoff rip-off is so basic that it doesn't even have a fancy name among the specialists who track mortgage fraud. But then, its simplicity is what makes it so endearing to criminals — and so endless.

"It's the same kind of scam as the one from the guys in Nigeria," said Merle Sharick of the Mortgage Asset Research Institute (MARI). "It's the same stuff we've been seeing for 100 years."

It's not among the most reported types of mortgage fraud, so it is probably sliding under the radar of most law enforcement agencies. But Jennifer Butts, a coauthor of the latest LexisNexis MARI fraud case report, says her firm is seeing more of it.

The maneuver "works for maybe two months" because it takes that long for borrowers to realize they've been had, said Becky Walzak, an expert in loan-quality assurance.

When the real servicer calls to tell the borrower the first payment hasn't been received, Walzak explained, the borrower reports that he did indeed send a check, and the two parties usually let it go at that. But when the borrower gets a second call informing him that the payment is still missing or that the next month's payment hasn't been received either, the now-worried borrower tells the servicer about the letter he received a month or two earlier, and the trick is exposed.

"It works for maybe two months before it is discovered," Walzak said. "But if the bad guys are any good, they've taken in thousands of payments from thousands of people. They cash them, and they move on to the next batch of borrowers."

lsichelman@aol.com

Distributed by United Feature Syndicate.

About Ady Simion (Realtor and Public Notary)

Ady Simion was named in the Top 1% of all agents for NRT LLC a subsidiary of Realogy that operates a variety of real estate offices under brands such as Coldwell Banker, Sotheby's International Realty, Century 21, The Corcoran Group, and the technology-based brokerages ZipRealty and Climb Real Estate. NRT has 787 offices and 47,000 sales associates. Selling and buying property can be very stressful but with the right agent it can be profitable and a fun experience. Ady is also a Notary Public and being a people person he wants to help negotiate for his clients making their transactions as smooth as possible. Ady’s goals are simple: He wants to be the best source of information on the Los Angeles area Real Estate market, as he assists clients through each transaction with care and professionalism. He is proud of his large referral base of clients who have placed their trust in him over the years. Why him, when there are so many good people out there?!?! • Sellers will have their property exposed to the largest team of sales professionals in the world by far. Coldwell Banker Agents sale more homes than anyone else. • Buyers will have the opportunity to view more properties exclusively. • And most importantly when you hire him you get a whole team working for you not just “only one person”. Ady Simion started his Professional Career as an Insurance Agent, and then mastered the Mortgage Industry focusing on helping buyers and sellers achieve their life dreams. He now is an Agent with the Largest Residential Real Estate Company in the nation and the world, Coldwell Banker, at the Pasadena office which is the leader in the areas in which he specializes. After finishing College Ady has consistently been a Top Producer in every office/business he worked at. He speaks English, Romanian and Spanish. Real Estate is constantly changing and working with an agent that has been involved in the Real Estate buying/selling process most of his life is always beneficial for clients. Call, text or e-mail him or just stop by to say Hi and ask any real estate questions you may have.

Posted on June 9, 2011, in Uncategorized. Bookmark the permalink. Leave a comment.

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