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Combating Fraud and Unethical Practices in Real Estate Transactions.

Certainly anyone involved in the real estate industry is interested in the subject of fraud and the many ways in which parties to a transaction can "cook a deal." This explains the popularity of MBA's publication, Combating Fraud and Unethical Practices in Real Estate Transactions, which was prepared by a special ethics task force commissioned by the Mortgage Bankers Association of America (MBA). The publication is directed toward all players in the mortgage industry including lenders, brokers, builders, insurers, investors, appraisers, and so forth.

With loan losses on the rise, the MBA recognized the need to heighten awareness of loan fraud. As a result, the Ethics in Real Estate Transaction Task Force was organized to develop guidelines to minimize losses from fraud and unethical practices. Findings from the task force became the basis for the book.

Combating Fraud alerts industry participants to "questionable" real estate finance practices and stresses the importance of early detection of loan fraud in order to mitigate losses. Meaningful recommendations are offered to handle fraud and prevent reoccurrences.

Organization of the book follows the flow of mortgage financing and its related documents from start to finish. This allows the reader to conceptualize both the means and the motivation behind questionable lending practices. Examples and case studies are included to "bring home the message" to the reader.

Each area of discussion includes warning signals ("red flags") specific to either the lending process or loan documentation. The "red flags" are a valuable training tool to familiarize staff with potentially fraudulent activities and what can be done to reduce the risk of fraud.

A discussion of information-sharing and legal issues related to fraud is a hotly debated subject, as lenders try to find effective methods of protecting themselves and the industry from the "bad guys." The publication does an excellent job of identifying the risks associated with information-sharing and specifies the legal precedents or statutes applicable to specific situations, plus gives recommendations for the proper way to share information. Overall, there appears to be no insurmountable legal impediment that would preclude the exchange of information on mortgage fraud.

In summary, Combating Fraud is a timely publication and the task force is to be congratulated on its work. To carry its message into the workplace, the publication includes a sample code of ethics in the appendix, which summarizes the general ethical conduct expected of mortgage banking employees.

Reviewer Jeffery E. Polkinghorne is vice president of corporate quality at GMAC Residential Funding Corporation, a private secondary market mortgage conduit, located in Bloomington, MN.
COPYRIGHT 1992 Mortgage Bankers Association of America
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:Polkinghorne, Jeffery E.
Publication:Mortgage Banking
Article Type:Book Review
Date:Sep 1, 1992
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