Demand Mounts for Workout Specialists and Forensic Services as Delinquencies, Foreclosures, Fraud Rise
U.S. foreclosure filings rose to a record in August as falling home prices made it harder to sell or refinance homes to pay off the mortgage, according to RealtyTrac Inc. Mortgage loan delinquency rates also increased for the sixth straight quarter. Traditionally seen as a precursor to foreclosures, mortgage delinquencies jumped 9% during the second quarter (the sixth straight quarter in a row) from the first quarter, according to a report recently released by TransUnion, the Chicago-based credit bureau. That’s a national average high of 3.53% for the second quarter – up 51% from the same period a year ago. Meanwhile, the FBI is investigating 24 cases of potential corporate fraud related to mortgage lending – a substantial increase from July, according to Reuters.
Pressure is mounting to ease the housing crisis, and holders of securitized subprime mortgages are being urged to restructure or workout loans that are delinquent or likely to default. Executive search firm, A.E. Feldman, says the trend is creating opportunities for candidates with expertise in underwriting, restructuring, valuation and loan workouts. The fields of fraud and litigation as well as forensic accounting are also getting hotter. Membership in the Association of Certified Fraud Examiners (A.C.F.E.), which was founded only in 1988, has increased by more than 50% since 2003 to 45,000 members. Executive search firm, A.E. Feldman, says that accounting jobs, particularly fraud and litigation opportunities as well as business valuation jobs are opening up. CPAs with expertise in forensic accounting are also in a prime position to benefit from the surge in demand.
Commenting on the 9% rise in mortgage delinquencies during the second quarter Keith Carson, Senior Consultant in TransUnion’s Financial Services Group says, “The continued increase in the mortgage delinquency rate was not surprising. The second quarter of 2008 showed not only a substantial increase in the nation’s unemployment rate and unprecedented gas prices, but also a continued decline in consumer confidence.”
The national 60-day mortgage delinquency rate among mortgage borrowers is expected to continue rising through 2008 to more than 4%, according to Carson. TransUnion, however, predicts mortgage delinquency rates will taper off next year as economic conditions improve and home prices begin to stabilize.
Mortgage delinquencies are viewed as a precursor to foreclosures. That said, owners of 303,879 properties, or one in 416 U.S. households, got a default notice, were warned of a pending auction or foreclosed on last month - the most since reporting began in January 2005, reports RealtyTrac Inc. This amounts to a 12% percent increase from July and a 27% jump from the same period a year ago. The report also shows one in every 416 U.S. households received a foreclosure filing in August.
“The increases in default and auction activity could be slowing down partly as the result of new legislation passed in several states that is designed to give homeowners in distress more time before foreclosure proceedings are initiated. In addition, some lenders are adopting loan servicing guidelines that encourage more pro-active approaches to helping homeowners avoid foreclosure,” according to RealtyTrac CEO, James J. Saccacio.
Right now, facing increasing delinquencies and foreclosures, mortgage lenders have tightened underwriting standards. As a result, fraud is on the rise.
The FBI is investigating 24 cases of potential corporate fraud related to mortgage lending, up from 21 cases disclosed by the bureau in July, according to Reuters, citing Bureau Director Robert Mueller. The report adds the development comes as lawmakers express new concern about the impact of fraud cases in the wake of fresh turmoil in global financial markets tied to the collapse of the U.S. mortgage lending industry.
Answering questions before the House of Representatives Judiciary Committee, Meuller stated, “Just like the (savings and loan) crisis in the early 1990s and the corporate excesses of the beginning of this decade, the FBI will pursue these cases as far up the corporate chain as necessary to ensure that those responsible receive the justice they deserve.”
To learn more about these issues or inquire about existing and future job opportunities in restructuring, valuation and loan workouts as well as forensic accounting and bankruptcy law, the lines of communication are open. Contact A.E. Feldman’s President, Mitch Feldman, and the firm’s expert recruiting team here.
