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Mortgage Companies hire private investigators to investigate mortgage fraud April 10, 2011

Posted by jefhenninger in Articles.
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Law enforcement is permitted to lie to you to secure a confession.  However, there are restrictions in what they could lie about.  However, private citizens including private investigators can lie to you.  Thus, if you get contacted by an investigator that is looking into your loan application, you may want to speak to an attorney before you say or do anything.  I would be especially concerned if the investigator actually shows up at your house.  To illustrate this point, consider this example from a recent case I had:

My client (who denied any wrong doing) was visited by a local investigator who was working on behalf of a company called Armitage & Associates based out of Milwaukee, Wisconsin.  The letter indicates that “Armitage & Associates and Investigative Solutions, LLC have been retained by Mortgage Guaranty Insurance Corporation (MGIC) to reverify, as part of an internal control process, the facts and circumstances surrounding the mortgage loan application by ….”.  The letter goes on to say that “a quality control audit is in effect for the above mortgage loan transaction.  This is NOT an attempt to collect a debt or legal issues; this is strictly an attempt to confirm information on your original loan application, which is required as part of a routine quality control audit.  Your interview is necessary in order to finalize and close this file.  Your prompt attention and cooperation is appreciated”.

OK, let’s break this down.  This company is going through some type of quality control audit for a mortgage that was written some time ago.  Oddly enough, the property in question went into foreclosure.  If there is a quality control audit going on, couldn’t they just call you and ask you some questions?  Or, couldn’t they just mail you some information to fill out?  Instead, MGIC would rather hire one company that would then hire another company to come to your house and speak with you.  Of course, instead of just sending anyone to you, they hire and send out “investigators”.  Why are private investigators involved in a quality control audit?  Why are they spending so much money just to look into quality control for an application from several years ago?  None of it adds up does it?

Looking at Armitage’s website, one will see that they have a big focus on mortgage fraud.   They say that: “Our mortgage fraud investigation team is comprised of former mortgage insurance industry insiders – loan originators, underwriters and loan processors.  Along with our unique blend of innovative and traditional investigative techniques, we have the knowledge and insights to know exactly what information is needed and how to obtain it.  You can rely on our mortgage fraud investigation team for reliable research, detailed reports and prompt turnaround time.”

Their website also includes testimonials, such as this one “Over the past 4 years we have used Rico Garcia and Armitage & Associates to investigate mortgage fraud involving lenders, brokers, mortgage loan originators, processors, realtors, appraisers, and borrowers. The success of each of our lawsuits against any of the above named “fraudsters” was the direct result of the investigative work of Armitage & Associates.”   Doesn’t sound like an audit to me.  While Armitage does indicate that they offer quality control services, mortgage fraud does seem to be a major focus for them. 

Why would MGIC be looking into old mortgage applications?  When a bank forecloses on a home with an insured mortgage, companies such as MGIC are on the hook for the payments.  If they can prove that there was fraud, they may be able to get out of paying up.  For example, in one California case involving a dispute with Countrywide, MGIC indicated that they performed an investigation and “first, contrary to Countrywide’s insurance application, [the borrower] was never an account executive at GNG Investments.  There is no such enterprise operating in Santa Clara or anywhere else in California.  Nor did she earn $13,494 per month, as Countrywide represented.  Instead, she earned $3,901.58 per month as a janitor for Santa Clara Valley Medical Center. … she never had a bank account at Wells Fargo, let alone one worth $45,000.  Nor did she put a $30,000 down payment—or a down payment of any amount—on her house”.

How do you think they found out all of that information?

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Comments»

1. iinn - May 20, 2013

Hi,
What happened to your client? I am curious because one week ago, I was contacted by phone by someone who claims to be an investigator from MGIC. He says they are doing a “quality control” from a mortgage that was given to me many years ago, for a property that went into short sale.

jefhenninger - May 21, 2013

Like many of our clients, nothing happened to them. If they told you they were investigating you for fraud, would you comply? What company in this economy hired a private investigator to do quality control?

iinn - May 22, 2013

Were they going after your client or the mortgage broker? Thanks a lot for your reply..!

2. jefhenninger - May 22, 2013

Probably both.

3. josh smith - August 14, 2013

any updates on what happened with your client?

jefhenninger - August 14, 2013

Case was closed, he was never charged.


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