www.hudclips.org 


U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410-8000

 
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgagee Letter 87-25
    TO:    All Approved Mortgagees
    SUBJECT:  Fraud Alert - Fictitious Notices of Mortgage
                  Transfer or Sale
 
          A new mortgage fraud scheme has emerged which affects both
    mortgage lenders and borrowers.  The scheme, though simple, has
    the potential to cause financial loss to borrowers and disruption
    of lender servicing.
 
          The scheme is perpetrated by individuals who send notices
    to borrowers informing them that their loans have been
    transferred or sold to a different financial institution.  The
    notices, written on the letterhead of a bogus company, instruct
    the borrowers to make all future monthly mortgage payments to the
    "new" company.
 
          Recently, about 3,000 borrowers in the Denver, Colorado,
    area received notices instructing them to send their payments
    and correspondence to a post office box.  A number of borrowers
    believed the notices and mailed their payments, as instructed.
    The scheme, which involved both Federally insured and
    conventional mortgages, is being investigated by Postal
    Inspectors.
 
          In order to prevent FHA-insured borrowers from becoming
    victims of the scheme, you may want to advise borrowers not to
    remit payments to other financial institutions, unless they are
    given proper notice by your company.  You should also advise them
    that HUD regulations require you to notify them when the
    servicing of their mortgage is transferred.  The notices must
    provide the borrower with the name, address, and telephone number
    of the new servicer.  Additionally, borrowers may be advised to
    contact your company to verify a transfer of their account.  When
    you learn of a fictitious notice of transfer, you should notify
    the local HUD Office or HUD's Regional Inspector General.
 
                                   Sincerely,
 
                                   Thomas T. Demery
                                   Assistant Secretary
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