As banks cut corners, tons of jobs are now being lost to offshore outsourcing. In the financial services industry, that means customer service reps and mortgage underwriters. Banks and mortgage companies have the right to save money, of course. But not when saving money means cutting corners and writing shoddy loans.
Many of the mortgage underwriting and servicing jobs today are being done in the Philippines. In fact, many of the call center jobs in India have left and set up shop in the Philippines.
The pressure to produce is immense. So much so, that quality has dramatically deteriorated. We are currently investigating claims that US banks and other lenders have begun a massive offshore outsourcing campaign. While outsourcing is nothing new, some banks and lenders are sending functions that require qualified or licensed people to places where the labor is cheap and the quality poor.
Ironically, as the Philippines tries to muscle into the work recently performed in Mumbai and other Indian cities, some Indian companies are cutting even more corners just to stay price competitive. A recent press release from the Associated Chambers of Commerce and Industry of India says that India is losing 70% of its call center business to eastern Europe and the Philippines.
Who suffers when US home loans are being processed in low quality, high pressure offshore shops? American taxpayers and homeowners.
Taxpayers suffer because most residential mortgages are today backed by the government. That means our tax dollars.
Homeowners suffer because they are put in homes they can’t afford or aren’t worth what they were told. Underwriters are supposed to be catching these things. But with so much of the work now offshore and being done by unqualified people, the system has miserably failed.
To write a federally insured loan, a bank or mortgage company must certify full compliance with all FHA, HUD and other rules. A lender that doesn’t comply violates the False Claims Act. That means triple damages and big penalties.
For whistleblower, it means the ability to collect huge cash awards.
Whistleblower Awards for Offshore Outsourcing Information
The False Claims Act pays awards of up to 30% of whatever monies are collected from the wrongdoers. Qualifying for an award means being the first to file a sealed complaint in federal court. It also means having inside, nonpublic information about fraud involving US mortgage guaranty programs.
When the wrongful conduct involves offshore outsourcing, it means mortgage underwriters being paid on a commission basis, poor quality work, incomplete loan files, inadequate sampling or work being performed by unqualified personnel.
Investigation Involving Serco and Intelenet
Serco Group PLC is a British outsourcing company with an extensive presence in India as well as the Philippines, Europe, Middle East, South Africa, Mauritius, Guatemala and Australia. Intelenet is short for Intelenet Global Services Private Ltd. It is an outsourcing company based in Mumbai but claims several U.S. facilities. For a while, Serco owned an interest in Intelenet.
We believe that over the last 6 years, both companies have violated the False Claims Act by improperly processing mortgage applications (underwriting). Banks and mortgage companies that do business with these entities are primarily liable if they knowingly allow unqualified vendors to process federally insured mortgages.
Other Offshore Outsourcing Schemes
Our investigation is not limited to Serco and Intelenet. Any company that writes federally insured mortgages and fails to properly comply with all underwriting guidelines is potentially liable if the noncompliance is material.
Recently, the case we filed against Allied Home Mortgage in March of 2011 went to trial. On November 29th, a Houston jury awarded the government $92 million after finding that Allied violated the False Claims Act. One of the violations was an allegation that the company had offshored its quality control operations to the Virgin Islands. Witnesses say that when questioned, one of the alleged quality control specialists there didn’t even know what a mortgage was.
Do we want these folks handling our mortgage underwriting?
We have no issue with folks in the Philippines, India, the Virgin Islands or anywhere else performing these tasks as long as they have the required training and licensing and follow all underwriting guidelines. We think they often don’t because they are both outside the U.S. and therefore beyond the easy reach of regulators and because some of these companies hide behind thinly staffed U.S. offices making it appear that the work is being done locally by qualified personnel.
And its not just underwriting that is going offshore. Industry publication Housing Wire says as much as 73% of Ocwen's mortgage servicing business is now offshore. And that leads to quality control issues. "Less experienced offshore staff can lead to ineffective communication with borrowers..."
If you have information about illegal offshore outsourcing or any other violations of HUD mortgage underwriting guidelines, contact us. You may be entitled to a substantial cash award. All inquiries are protected by the attorney – client privilege and kept confidential.
Not a U.S. citizen? Don’t worry. You still qualify for an award if you have inside information of wrongdoing.
For more information, contact attorney Tim Granitz at [hidden email] or by telephone at 414-704-6731 (direct).