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Merle D. Sharick, CMB, is responsible for all business development activities for the Reston, Virginia-based Mortgage Asset Research Institute (MARI^sup sm^), an Alpharetta, Georgia-based ChoicePoint® company that is an established player in the mortgage fraud data collection field.
MARI serves 700 subscribers by providing public and nonpublic financial sanction information; state-licensing verifications; criminal-, credit- and identity-verification reports used in the broker/correspondent approval process; and in the quality assurance and fraud investigations areas.
Prior to joining MARI, Sharick was a risk-management and businessdevelopment executive in the private mortgage insurance industry for 21 years.
Sharick is co-author of MARI's recently released Tenth Periodic Mortgage Fraud case Report to the Mortgage Bankers Association, which concluded that there will be even greater pressure on all industry players to generate loan volumes during the overall downturn in the real estate market.
Sharick is a graduate of Southwestern College, Winfield, Kansas, and he also holds a master's degree from the University of Kansas, Lawrence, Kansas.
Sharick recently spoke with Mortgage Banking about the findings in the annual MARI report, as well as the current state of mortgage fraud.
Q: Let's start with a working definition of "mortgage fraud"and has that definition changed or evolved within the past year?
A: When you talk about [mortgage fraud], you're talking about fraud and misrepresentation. We divide fraud into two parts-fraud for profit and fraud for housing.
Fraud for profit is when somebody consciously sets out to steal money from those folks that have it in a transaction, which are the lenders. Fraud for housing-a good example is somebody who qualifies for a 1,200-square-foot house but they really want a 1,500-square-foot house, so [to qualify for the larger house) they misrepresent some of their income or increase their income, lower their obligations, maybe puff up what their job is compared to what it really might be.
What we tell our subscribers that contribute to the MIDEX® [Mortgage Industry Data Exchange] database is that if you had known the truth, you would have made a different decision. You wouldn't have originated the loan, you wouldn't have insured the loan if you were an insurer, and you wouldn't have purchased the loan if you were a secondary market investor.
So that's really the definition in terms...