Following his release from a five-year prison term for participating in a $124 million mortgage fraud scheme, a former loan originator is helping mortgage bankers avoid being victimized by people like him.
Kevin Barnes, 47, was convicted on federal charges and sentenced to five years in prison for role in a $124 million mortgage fraud scheme run out of Kansas City.
“We changed and altered tax returns without customers knowing it,” Barnes told MortgageDaily.com. “We sold bad loans on the secondary market. We used appraisers, mortgage brokers, real estate agents.”
But eventually Barnes was caught. After being released from prison in 1997 he decided to not only go straight but to help the mortgage industry cut down on fraud by showing how it is done.
In other words, the fox is showing the chickens how to guard the hen house.
Barnes’ Mortgage Fraud Awareness firm, which is based in Lawrence, Kan., trains mortgage industry employees on how to detect and prevent fraud.
In a posting on his corporate Web site Barnes said he “brings to the table true front line experience … that will leave you with the lasting impression of the industry falling short when it comes to training.”
“This is an epidemic, but companies just say it is the cost of doing business,” he said. “The mortgage industry … needs to retrain and rethink.”
Barnes said he does more than 125 events a year, speaking to mortgage brokers and lenders, appraisers and others. He has also conducted seminars and continuing education in concert with the Mortgage Bankers Association of America.
Barnes said he tells people to be on the look out for what he calls “the red flags” that can indicate a fraud scheme may be taking place. Checking the authenticity of documents is a good place to start since many fraud schemes rely on phony pay stubs, appraisals, employments records and others.
Though fraud has been rampant during the last few boom years of the mortgage industry Barnes said the temptation to deceive lenders into making loans will now be greater than the market has tightened and the borrowing has slowed down as interest rates have risen.
“During the (refinance) boom in the last three to four years people in the industry were living lifestyles high on the hog,” he said. “They don’t want to give up that lifestyle.”
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Appraisers, loan originators, title companies, closing attorneys, and real estate agents are being asked by brokers and others “to make deals work” that were getting turned down a few years ago, Barnes said. “Loans that were on the bubble are now being brought in the front door and pushed through the back door,” he said. “People just want to get them done. It becomes a predatory lending issue as well … because there was a reason these people were turned down before. “Everybody can be involved,” he said. “You have to watch what you’re doing.” |
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