Rebchook on Real Estate Insights gleaned from John Rebchook's 25 years of reporting on Denver's residential and commercial real estate. Send your questions and comments to rebchookj@rockymountainnews.com.

An earlier blog that I wrote about an illegal alien that used a phony Social Security number to buy a home that is headed to foreclosure garnered a fair amount of attention.
I sent an e-mail to Rachel M. Dollar, a real estate attorney in Santa Rosa, Calif., to ask her a few questions about the issue. I asked her because she has her own blog, appropriately called mortgagefraudblog.com.
Here are the questions and her reponses:
Rocky: What is the responsibility to report this to authorities?
Dollar: The 'responsibility' depends on the type of lender and the relevant contracts. They may have a legal obligation to report to state or federal authorities and may have an obligation to report to either the owner of the loan if it was sold into the secondary market or to the trustee of the pool, if it was securitized.
Rocky: If the lender is obligated to report the fraud, who would they report it to?
Dollar: If the state requires reporting, it would be to the agencies that regulates lenders or to a law enforcement agency.
I'm only aware of one state (Georgia) that requires this although this may have been adopted recent mortgage fraud legislation in other states.
On the federal side, federally regulated financial institutions are required to report suspicious activity (inluding suspected mortgage fraud) by way of filing Suspicious Actitivity Reports with FinCen. The reports are then funnelled to the FBI and other federal law enforcement agencies for investigation and/or prosecution.
Rocky: From your experience, how likely is that to happen?
Dollar: A false Social Security number is more likely to be detected pre-funding than post funding. There are some companies, such as Rapid Reporting and Interthinx that offer services that verify Social Security numbers through the Social Security Administration.
Although lenders do conduct random stratified post-closing audits on a percentage of loan files (and those services for validating a SSN might also be utlized in a post-close audit), most fraud is discovered through target audits which result from patterns.
SSN frauds are not generally concentrated and don't always result in default and so they are often not detected post-closing.
Rocky: Have you ever run into a situation like this?
Dollar: I've seen SSN frauds before. The hesitancy to seek assistance is common with illegal immigrants - regardless of the reason for the need. There have been a couple of indictments of mortgage brokers and/or real estate agents for 'assisting' illegal immigrants to obtain loans. Here's one (Colorado even . . ):
http://www.mortgagefraudblog.com/index.php/weblog/permalink/further_indi
ctments_for_colorado_hud_loans_to_illegal_immigrants/
We carried an article some time ago about a reported FHA crackdown in Missouri where they were allegedly tracking down and deporting immigrants that used fasle SSNs to obtain FHA Loans here: http://www.mortgagefraudblog.com/index.php/weblog/permalink/fha_crackdow
n_on_false_social_security_numbers_used_for_mortgages/
Rocky:Any thoughts on what the homeowners should do?
Dollar: I would rather not opine as to the correct course of conduct for a homeowner in these circumstances.

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