Back in 2018, Fannie Mae issued a warning to lenders after identifying more than 30 apparently fake companies that were appearing on borrowers’ mortgage documentation as their place of employment.
There were 30 companies on the initial list of potentially fake employers. Later, the government-sponsored enterprise identified 15 more companies that appeared to be fictitious.
Things went quiet after the list of companies grew to 45, but now, the GSE is warning lenders that there are more potentially fake companies out there.
Fannie Mae sent a bulletin to lenders Wednesday identifying 15 more apparently fake companies that it has seen on borrowers’ mortgage documents.
All of the previously identified fake companies were located in California, and these 15 new ones are all located in California too.
In total, there are now 65 potentially fake companies that Fannie Mae has seen on loan documents. According to the GSE, the 65 companies were listed as the borrower’s purported place of employment on an unknown number of mortgages, but Fannie Mae could not verify whether the companies actually existed or not.
According to Fannie Mae, the newly identified potentially fake companies are:
- BK Precision, located on E. Lowell Street in Ontario
- CY Petfood, located on Boyle Avenue in Los Angeles
- Galaxy’s Auto Parts and Accessories, located on Stellar Drive in Culver City
- GBF Freight System, located on Easton Drive in Bakersfield
- Gold Coast Transport, located on Imhoff Drive in Concord
- Golden State Electronics, located on Evans Avenue in San Francisco
- Gonz Fidel Books and Engineering, located on North Milpitas Boulevard in Milpitas
- Ideal Pro Systems, Barnard Avenue, located on Barnard Avenue in San Jose
- Public Mark Productions, located on Sherman Way in Reseda
- Ricardo’s Beauty Wholesale Supplies, located on Pirrone Road in Salida
- Rodell Network Communications, located on Lakeside Drive in Santa Clara
- Sac Bar and Kitchen Supplies, located on Raley Boulevard in Sacramento
- San Fernando Service, located on Sherman Way in North Hollywood
- Senior Home Health Care, located on Industrial Boulevard in Victorville
- West LA Dental Studio, located on Overland Avenue in Los Angeles
According to Fannie Mae, there are a series of red flags that lenders should be on the lookout for on loans that could include a fake employer or other potential mortgage fraud issues, including:
- Third-party originated/broker loans
- Originated 2015–2019 (present)
- Employment (occupation) does not “sensibly” coincide with borrower’s profile (age or experience)
- California (geographic common denominator)
- Borrower on current job for short period of time
- Prior borrower employment shows “Student”
- Starting salary appears high
- Purported employer does not exist
- Employer’s purported location cannot be ascertained
- Paystub templates are similar for various employers across other (involved) loan files
- Paystubs sometimes lack typical withholdings (health, medical, 401(k), etc.)
- Gift letters are substantial and are not (or cannot be) supported through re-verification
As for what lenders can do to identify and address these issues, Fannie Mae lays out a series of steps.
“Prudent origination, processing, and underwriting practices should include looking for red flags in the loan documents that raise questions about the transaction,” Fannie Mae said.
“Verify that the borrower’s place of employment actually exists and obtain supporting documentation. If one of these entities is disclosed as the borrower’s place of employment, exercise due diligence in reviewing the entire loan file,” Fannie Mae continued. “Lenders must exercise caution in these situations and take appropriate steps to prevent the institution from being the victim of fraud.”
Fannie Mae’s bulletin also provides several examples of fraudulent activity that lenders should be on the lookout for. The bulletin also lists all 65 potentially fake companies. To read the GSE’s full bulletin, click here.
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