A specialized firm set up to battle mortgage fraud and its attorney/founder are fighting mortgage scams by purchasing litigation rights. Then IMARC is tracking down the bad guys and nailing them in court.
MORTGAGE FRAUD IS NOTHING NEW TO THE MORTGAGE INDUSTRY, THE GOVERNMENT OR THE MEDIA.
Countless committees, hearings, studies, task forces, stories, exposes and in-depth reports have been devoted to the subject. But has all that attention really uncovered the true depth and breadth of the problem?
What's really going on out there? Do we really want to know? If we did know just how frequently fraud creeps into the mortgage business, what would we have to do about it? What would the government do? How would the industry and your job change if there truly was a vigorous and united campaign to wipe out fraud?
These are some of the fears surrounding mortgage fraud. Like all fear, it can mobilize or paralyze. Mortgage fraud is not going away--and with emerging technologies, it may only get worse. This is a story of how one company is taking on mortgage fraud and advocating for solutions that deal with the core issues that enable it to occur.
When someone defrauds a lender, the lender has legal rights. It can go after the individual or entity in civil and criminal court. By doing this, the lender vindicates its own rights and fires a shot across the bow to future culprits that there will be accountability--thus protecting the industry as a whole.
Unfortunately, this isn't always the way it works. Police and prosecutors don't have the desire or resources to pursue mortgage fraud, and in many instances lenders lack the resources--or the desire to expend them--to pursue action in civil court. One option for lenders that either can't or won't pursue their claims in civil court is to sell the litigation rights to a third party that can bring suit and, if successful, obtain a judgment and recover monetary damages.
Selling judgments is nothing new. In such instances, a person who has already obtained a judgment against a person or entity sells the right to collect the money. The purchaser merely tracks down the judgment creditor and collects.
Selling litigation rights is trickier. You're not just selling a debt--you're selling a potential debt. The purchaser still has to go out and try the case or get a settlement before the process of collection even begins. There is at least one company in the United States that is doing this right now in the mortgage field. Investor's Mortgage Asset Recovery Company, LLC (IMARC), Newport Beach, California, founded by attorney Bob Simpson and financier Gene Leyton, purchases the litigation rights to mortgage fraud claims. It's a financial venture, to be sure, but for Simpson it is also a vehicle for attacking mortgage fraud and advocating for solutions.
"I did not see myself doing this when I was in college or even law school," remembers Simpson. Simpson grew up in Southern California. He earned an economics degree from UCLA, followed by a law degree from Duke University. He began practice in Salt Lake City with the firm of Ray, Quinney & Nebeker.
"I was doing corporate law, banking and mortgage banking issues," he says. Yet, Simpson felt unfulfilled. He liked real estate and decided to become a mortgage broker. So in 1986, he moved back to Southern California and dove in. "The secretary at about the third office I went to asked me how long I'd been a loan broker, and I really was tempted to look at my watch," jokes Simpson. He was very successful and worked as a loan broker for the next 10 years. "I liked my job. I liked helping regular people get loans. It was tangible success," he says. But that started to change.
"It was a few things, really," Simpson says. "I was in a...