Buying a house is a journey that ends at the closing table, with a mountain of papers that most people don't read, and never will.
But sometimes, the trip doesn't end where it should.
Take the case from a couple of years ago, when a California closing agent called the lender to say that he couldn't attend the scheduled settlement because he'd been arrested on the way there.
Or the 2013 closing in Texas that had to be adjourned because none of the participants, aside from the settlement agent, spoke English, and he could not communicate with them.
Or the instance in Massachusetts, when the closing attorney passed away two days before escrow and no one informed the other parties. The borrower showed up, the seller showed up and the title company rep showed up -- but not, of course, the deceased attorney.
Anomalies, you say? Au contraire. Andrew Liput, CEO of analytics firm Secure Insight, has been collecting these and other closing-time tidbits for a decade. And he swears they're all true.
But mortgage fraud, which often happens at the closing table, is no laughing matter. The FBI estimates that 13 percent of all mortgage fraud occurs at the settlement table, and Liput estimates around $650 million in lender or borrower money is lost because of it. Not a lot of money in the overall mortgage industry, perhaps, but as Liput eloquently puts it, "not chump change, either."
And it's not just dollars and cents at stake: People run the risk of having their personal information compromised.
"Closing is a mystery to most people," says Liput. "They show up excited, but they don't have a clue to what's going on. It's an environment that's a good breeding ground for fraud."
The message, then, is to keep your antennae alert to anything that might seem out of the ordinary. Stay vigilant to avoid falling prey to con artists. Liput has plenty of tales of fraud in his hip pocket to serve as warnings:
-- Last year, an Alabama man was convicted in a $15 million mortgage fraud scheme. During the investigation, it was discovered that not only did the perp orchestrate the massive fraud with the assistance of several professionals, he also contracted with another individual to kill the straw buyer. Testimony showed that the "hit man for hire" lured the straw buyer to a wooded area and shot him multiple times. Fortunately, the victim survived.
-- A Maryland title agent was sentenced to 51 months in prison, followed by three years of supervised release, for conspiring to commit wire fraud in connection with a mortgage fraud scheme that resulted in losses of more than $4.8 million.
-- In 2002, a title agent's license to issue title insurance policies was revoked after she was convicted of theft for fraudulently endorsing checks at the title attorney's office where she worked. Despite her conviction, she worked at another title agency from 2007 until 2010, this time as a manager -- and once again engaged in fraud.
-- A settlement agent from Tennessee operated for three decades without the required state business license, only obtaining one when finally confronted with evidence of the state law. He maintains that no one had ever asked him about it in 30 years of practice.
-- A Virginia attorney was using his personal, husband-and-wife joint checking account as his trust account, and had been doing so for more than 20 years. Lenders and warehouse banks were happily wiring funds into that account without ever verifying the account's type or its owner. Even more amazing, regulators never performed an audit.
-- In California, a mobile notary who was being sent to close loans in customers' homes was on the nationwide registered sex-offender list. Lenders had no idea their clients were welcoming this person into their homes. Neither did the company that hired the individual, because it failed to conduct complete background checks on its notaries.
-- A Maryland-area title company owner, who was closing loans for large national lenders, had been previously convicted of wire fraud and had his licenses revoked. Neither the lenders nor the title underwriter for whom the agent wrote title insurance was aware of his past, or the fact he was unlicensed.
-- In 2012, an employee at a major title company was charged with seven counts of grand theft and five counts of money laundering for his role in embezzling $469,000 for gambling purposes. This wasn't some run-of-the-mill title agent: He was the company's vice president, as well as its in-house counsel.