Credit Counselor: Document Fraud Proves Costly to Lenders, Consumers.(Brief Article)

When you look at movies and television today, computer technology can create amazing illusions. They are fun and harmless.

If you are in the mortgage business, though, and the computer technology is being used to create the illusion of false tax returns or bank statements, then it's not so fun and in fact very costly if the loan ends up defaulting.

"Among the biggest problems mortgage lenders are having today is receiving false documentation from borrowers that create them with the use of computers, desktop publishers and scanners," said Vee Morton, the owner of Morton & Associates, a Troy, N.C.-based mortgage fraud detection training company.

And increasingly, it's not only their own documents that people are altering; they are stealing documents from others and altering those to appear as their own.

"Identity theft is becoming more and more prevalent. There are people referred to as Dumpster divers that will go into the Dumpsters of banks and if things are not shredded, they can secure things like Social Security numbers from there, and sell those. Those are a hot commodity on the street," said Ms. Morton.

She continued, saying, "Lenders need to make sure they shred all of the documents because they could be held liable if someone gets into their Dumpsters."

And, while there is the potential for a lender to somehow become liable for some inadvertent participation in a fraud, what is more likely is that a lender will become the victim of a fraud.