MORTGAGE LOAN COMPLIANCE®

Fannie Mae’s new quality control requirement is designed to prevent a type of mortgage fraud called "shotgunning."

Beginning June 1, 2010 lenders originating mortgages being sold to Fannie Mae will have to pull a second credit report just before the loan closes.

By pulling a second credit report, lenders can find out whether other creditors have recently requested information about the borrower-typically a red flag indicating someone might be trying to obtain multiple loans from several lenders on the same property.

In most cases involving shotgun fraud the borrower skips town with the proceeds of all his loans. The lenders do not recoup any money because their mortgages are subordinate liens to the first recorded mortgage and the foreclosure sale will not be enough to cover the junior liens.

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