Experts Say Fraud Has Spread to Retail Loans.

Byline: Lew Sichelman

Minneapolis-Mortgage fraud has "crossed over" to the retail side of the business, according to a couple of experts in rooting out the crime.

Kathy Cooke, a senior fraud investigator for Freddie Mac, said her office is seeing an increase in the number of cases involving retail loan officers.

So, too, are the folks at the Mortgage Asset Research Institute. As the number of broker-driven loans has declined, said MARI's Merle Sharick, "fraud has shifted" to retail originations.

The two mortgage crime authorities made their comments here last month at the annual regulatory conference of the American Association of Residential Mortgage Regulators, which spent almost an entire day on the subject.

In another session, Seattle appraiser Richard Hagar called on the state overseers to come down hard on his colleagues who break the rules.

Noting that fudged valuations are "an absolutely essential part" of practically any scheme to defraud lenders, Mr. Hagar said he is "embarrassed about the way some appraisers have done their work."