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74 if payment is not made. is takes some time, as there are plenty of reasons for the scammers to put off the borrowers and the servicer. However, at some point in time, it becomes obvious that the "new owners", the scammers, are not going to pay the mortgage payments. However, by this time they have most likely sold the property to another buyer who may be collecting the rent or they may still be collecting the rent themselves. Once all this is sorted out, the servicer has very little recourse. e title has been transferred and while legally they can take it to court to prove their claim title to the property, it is a very lengthy and costly process. While the borrower still is liable for the debt, since they no longer have title, it becomes a personal loan, which the servicer is now collecting. In addition, the borrower no longer owns the property and has no motivation to continue making payments or maintaining the property. At the end of the day, everyone but the scammers loses but they are long gone and only if the government seeks to pursue them will they be held accountable. PREVENTING "LEGITIMATE" SQUATTING Another type of fraud involving foreclosed properties concerns squatters. is typical scenario involves property that has already been foreclosed and the owners evicted; in other words a vacant property. In this case, the scammers will hire a locksmith to take out the old lock and replace it with one in which they have the keys. ey will then advertise the property for rent and actually sign a lease agreement with people who are willing to rent the property. ese unsuspecting individuals will move into the property and live there until such time as the servicer puts the property up for sale or it is discovered that "squatters" are actually living in the house. Once these individuals are ques- tioned, they are able to produce a rental agree- ment which shows that they are actually renting the property. e scammers who have illegally gained entrance to the property are collecting and keeping any rent that has been paid. Needless to say, this situation also ends up in court with the servicer and/or owner getting the property. However, in addition to court costs there are maintenance costs which the servicer must bear. is scam unfortunately seems to oc- cur regardless of economic conditions. ere are stories of oceanfront villas that have been rented out for as little as $1,000 per month. And, on the subject of oceanfront properties and scams, another common one that occurs involves properties that are located in or near resort centers or areas popular with senior citi- zens and retirement centers. Unfortunately this scam most frequently involves senior citizens and often less-than-honest realtors. In this scenario, the borrower, who is living on a fixed income, decides that they can no longer afford the house or just want to sell it. ey will contact one of these disreputable realtors who gets the seller to sign a listing agreement with them. Once the property is listed, another individual involved in the scam will make an offer that is lower than what is actually owed on the property. e seller will ask for, and usually obtain, a short sale from the servicer. Once this sale is complete, the house will be listed again at a price much higher and more in line with the true market value. And, once the house sells, the scammers will walk away with the profits, leaving the consumer and the servicer with a loss on the property. So what can a servicer do to protect them- selves and their borrowers from being a victim of these types of fraud? One of the most effective means to prevent these scams from working is to educate the staff. ey need to understand not only how they work, but must be able to recog- nize the signs that indicate the borrowers may be involved in these scams, whether knowingly or unknowingly. If you do not have the experience or knowledge within your organization about these issues, there are numerous companies that offer excellent training programs. ASK AND YOU SHALL RECEIVE Another way to stop this fraudulent activity is to prepare a list of questions and actions that the collector can use to detect them. For example, if a borrower says that the house is being sold and the loan will be paid off, is there a way to alert the collector if no payoff request is received or other suspicious issues arise? Involving the Quality Control group provides for additional resources to evaluate the potential for fraud as well as provide guidance on how the issue can be addressed. It is also important that a Suspicious Activity Report (SAR) be sent to your regulator when such a scam occurs or when you identify one that involves your organization. is is typically the responsibility of the QC department. In addition, the organization should be keep- ing a list of these scammers. ey do not typi- cally stop at one property or one victim. Having this information and communicating it to all staff allows them to stop the issue at the onset. It would also be helpful if the company had a brochure to send to consumers along with late notices advising them of these types of scams. In addition, having a script or specific ques- tions that collectors have at hand that can help the borrower and the company sort through the potential for fraud before there is no recourse available. At the end of the day, we need to recognize that, in an industry that deals with large sums of money, we are always going to be seen as a potential opportunity for scammers. After all, as John Dillinger is credited with saying, "Because that is where the money is," when asked why he robbed banks. It is incumbent for servicers to have a process for constantly being aware of the types of fraud, what actions should be taken when the servicer becomes a potential victim and how to prevent it in the first place. Furthermore, in light of the focus on consumer protection, the industry also needs to be aware of and be able to assist the consumer to prevent them becoming a victim as well. At the end of the day, we need to recognize that, in an industry that deals with large sums of money, we are always going to be seen as a potential opportunity for scammers.

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