Mortgage Fraud by Robert J. Sadler, Marketing Director GAPS/AEGIS (TM) Today, the FBI and mortgage industry professionals believe 10-15% of all loan applications contain material misrepresentations, i.e. fraud. Many times these fraudulent loans end up in foreclosure resulting in financial losses to mortgage lenders. Unfortunately, many lenders recoup these financial losses from the public by increasing the cost of loans. Fraud hurts everyone. In the past, losses on defaulted loans was minimal. Inflation helped cover the financial shortfalls on foreclosed properties because properties were sold at prices above the loan amounts. With inflation ebbing and property values decreasing in many areas, lenders found themselves absorbing losses home loans home loans on defaulted loans. Fraudulent loans only exacerbated the lenders problems. Many times fraudulent foreclosed loans resulted in substantial losses. Four years ago Guaranty Asset Protection Services (GAPS) was formed to assist mortgage lenders in combating fraud. GAPS is a private investigations company dedicated to preventing and detecting fraud in the mortgage industry. GAPS works exclusively with clients in the business of making, selling, transferring, underwriting, or insuring residential mortgage loans. GAPS began investigating seasoned loans that were thought to have misrepresentation when the loan was first made. An example could have been a loan officer who fabricated pay stubs to help a borrower qualify bankruptcy info home loans for the loan -- insuring the loan officer collected his commission. Another example could have involved a borrower who submitted falsified tax returns. GAPS investigators researched files for misrepresentation and provided lenders the evidence needed to proceed with civil and/or criminal filings against the perpetrators. GAPS realized the industry needed a means of detecting fraud before the loan was funded. GAPS began providing a variety of services for lenders to help detect fraud early in the loan process. This proactive approach to fraud detection helped save lenders millions of dollars, resulting in more loans to the public. From inception, GAPS saved the investigative information virginia mortgage loans home loans in a data base and became the first nationwide repository of real estate lending fraud. The data base became known as AEGIS (TM). AEGIS (TM) was originally used by GAPS' auditors and investigators. In July of 1994 AEGIS (TM) implemented an on-line service for lenders to check loans through AEGIS (TM) for potential fraud, before the loan was funded. The data base helped lenders reduce losses from fraud. Steven Pizzo, a reporter with the National Mortgage News, stated in an article dated July 25, 1994 that "Any entity, human or corporate involved in the loan approval process is captured and stored by AEGIS (TM) cheap loan home loans each time it examines