Fraud Case Study
Freddie Mac Fraud
Thanaphan Darnsomboon
PME604 Project Financial Management
National University
December 18, 2012
Freddie Mac Fraud The definition of fraud is “an intentional deception or deceit, perpetrated for profit or to gain some unfair or dishonest advantage” (dictionary.com). Fraud is a breach of law and can be punishable by law. Mortgage fraud is one of the financial crimes where a company materially misrepresents or omits information on its mortgage loan documentation in order to secure a loan larger than what is actually required for the business. It could be perpetrated by one or more participants, including the borrower, real estate agent, loan officer, appraiser or multiple related parties. Fraud not only destroys a company’s reputation and makes customers feel that accompany unreliability but it also hurts homeowners, businesses and the national economy. It is crucial for companies to prevent fraud. However, sometimes the company commits fraud unintentionally. Companies need to focus on knowing and studying the ways to prevent it. The U.S. government has a department, known as the U.S. Securities and Exchange Commission (SEC), which inspects frauds. The primary purpose of the SEC is to control the stock market and prevent company malpractices, especially involving the purchasing of securities and company reports. The SEC has the power to license and moderate stock exchanges, the companies, which securities can be traded, and the dealers and brokers who do the trading.
Freddie Mac
There have been many famous fraud cases and Freddie Mac is an example of fraudulent practices. The Freddie Mac Company started in 1970 to expand the country’s residential mortgage markets and to create opportunities for home owners and reasonable rental housing. Freddie Mac played a key role in the US housing market. The mission of the company is to provide a stable and an affordable environment to the U.S. housing market. Freddie Mac contributes to the
Thanaphan Darnsomboon
PME604 Project Financial Management
National University
December 18, 2012
Freddie Mac Fraud The definition of fraud is “an intentional deception or deceit, perpetrated for profit or to gain some unfair or dishonest advantage” (dictionary.com). Fraud is a breach of law and can be punishable by law. Mortgage fraud is one of the financial crimes where a company materially misrepresents or omits information on its mortgage loan documentation in order to secure a loan larger than what is actually required for the business. It could be perpetrated by one or more participants, including the borrower, real estate agent, loan officer, appraiser or multiple related parties. Fraud not only destroys a company’s reputation and makes customers feel that accompany unreliability but it also hurts homeowners, businesses and the national economy. It is crucial for companies to prevent fraud. However, sometimes the company commits fraud unintentionally. Companies need to focus on knowing and studying the ways to prevent it. The U.S. government has a department, known as the U.S. Securities and Exchange Commission (SEC), which inspects frauds. The primary purpose of the SEC is to control the stock market and prevent company malpractices, especially involving the purchasing of securities and company reports. The SEC has the power to license and moderate stock exchanges, the companies, which securities can be traded, and the dealers and brokers who do the trading.
Freddie Mac
There have been many famous fraud cases and Freddie Mac is an example of fraudulent practices. The Freddie Mac Company started in 1970 to expand the country’s residential mortgage markets and to create opportunities for home owners and reasonable rental housing. Freddie Mac played a key role in the US housing market. The mission of the company is to provide a stable and an affordable environment to the U.S. housing market. Freddie Mac contributes to the
References: ABC News, (2011). Fannie Mae, Freddie Mac execs accused of fraud. Retrieved from http://abcnews.go.com/WNT/video/fannie-mae-freddie-mac-execs-accused-fraud- 15175308 Ballard, R. (2010). FreddieMac fighting fraud or crying wolf. Retrieved from http://www.californiashortsalelawyer.com/2010/09/freddie-mac-crying-wolf/ Fraud. (2012). Dictionary.com. Lexico Publishing Group. Retrieved from http://dictionary.reference.com/search?q=fraud Freddiemac.(2012). Company profile. Retrieved from http://www.freddiemac.com/ New York Times, (2011). Freddie Mac loses $6 billion in quarter. Retrieved from http://www.nytimes.com/2011/11/04/business/freddie-mac-loses-6-billion-in-third- quarter.html?_r=0