BioSig-ID Uncovers Mortgage Licensing Fraud Scheme

BioSig-ID’s gesture authentication technology helped uncover a massive licensing fraud scheme amongst mortgage loan originators in the US. The company’s solution combines a simple password with gesture recognition to enable secure multi-factor authentication. The platform asks users to draw their password, and then tracks the movements of the mouse or the user’s finger to make sure the pattern is consistent with prior login attempts.

The licensing fraud scheme, meanwhile, centers around an individual named Danny Yen, and involves more than 400 other mortgage loan originators. Yen offers a course called Real Estate Educational Services, which ostensibly exists to help mortgage loan originators complete the licensing exams that are required for those who do the job. The federal Secure and Fair Enforcement for Mortgage Licensing Act (SAFE) establishes minimum standards for originators, and requires 20 hours of pre-licensing education. It also forces originators to complete an additional eight hours of continuing education on an annual basis to retain their licenses.

The problem, according to the Conference of State Bank Supervisors (CSBS), is that Yen was essentially allowing his customers to bypass those requirements. He would have someone else log in for his clients to take the course on their behalf, and would then issue a false completion certificate even though the originator had not personally been present for the required classes.

BioSig-ID’s technology was able to determine that the people that were taking Yen’s course were not the same as those receiving the certificates. The offending originators will lose their licenses for three months, and will need to pay a $1,000 fine in each state in which they were licensed (while SAFE is a federal Act, each individual state is responsible for handling enforcement). California’s Department of Financial Protection and Innovation (DFPI) led the investigation, though it ultimately affected loan originators in 44 US states.

Yen is facing additional penalties as the ringleader of the operation. The Japanese IT firm TIS has previously tried using BioSig-ID’s technology to facilitate payments in Virtual Reality, while Edutacs (like the CSBS) has used it to secure its online examination process.

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February 4, 2022 – by Eric Weiss