Board Game Provides Twist on Fraud Detection

DALLAS–It’s the board-game equivalent of a mortgage murder mystery.  

“Fraud City,” developed more than 20 years ago by staff of Freddie Mac and Fannie Mae, challenges participants to use investigative skills to identify a fraud scheme taking place on the “mean streets of Fraud City.”

Participants form teams to go through a file to identify red flags and other clues to detect a mortgage fraud scheme.  

More than 50 participants here at the recent Mortgage Bankers Association’s Risk Management, Quality Assurance and Fraud Prevention Forum participated in the game, sponsored by Fannie Mae. Divided into groups of 8-10 members, the teams were aided by Fannie Mae staff who served as facilitators.  

Kim Ellison, investigations manager with Fannie Mae, said the game, designed to take little more than an hour, provides a lesson in the importance of identifying mortgage fraud schemes before they do serious damage.  

“We want people to take a broader look beyond the loan file,” Ellison. “On the surface, loan applications don’t look that bad. When you dig into the details, you see so much more.”  

The game, originally developed in 1992, was called “Fraudopoly.” Amy Heinz, director of the Mortgage Fraud Program with Fannie Mae, created the program while she was at Freddie Mac with Ellison and several fraud experts in the industry. Since then, she said, the game has been a “mainstay” at mortgage fraud and risk management conferences.  

At the onset, teams are given a packet containing documentation from a recent mortgage refinancing. They are given 10-15 minutes to go through the documents to identify fraud red flags. During this session, teams were quiet for the first five minutes or so; then, as files were perused, conversation quickly picked up as team members compared notes.  

“This guy already owns five other properties,” one participant offered.  

“There’s no evidence that the owner lives in the property,” another said.  

“A credit score in the 700s with a serious delinquency issue?” asked a third. “I don’t think so.”  

The game is designed to throw roadblocks in the way of the investigation-a kind of mishmash of “Monopoly” and “Clue.” Rolls of the dice can result in card draws that impose delays, “restructurings” and prevent introduction of key evidence. Participants can be “fired” from the game as well, although they can also be reinstated.  

“Time and speed is of the essence,” Ellison said. “Teams are competing with each other to be the first to correctly identify the fraud scheme.”  

Participants have roughly a half-hour to gather as much evidence as possible to pinpoint an overriding scheme. Teams earn points for uncovering red flags; if they successfully identify the primary scheme, they earn 10 points. Heinz said there is no one correct answer-a team could win the game by identifying numerous red flags without uncovering the primary scheme. However, she said winning teams usually identify the main scheme.  

Following the evidence-gathering phase of the game, Ellison walked participants step-by-step through each document, pointing out discrepancies. Representatives of each team then made brief presentations, outlining what they discovered and offering their conclusions. Following these presentations, one team with the most points was declared winner.  

“The amazing part of the game is that we’ve tested it with people who have no industry knowledge about mortgage fraud, and they still figured out the scheme,” Heinz said.