Mortgage Fraud
Loan Screening Checklist
None of the points below are themselves reasons to reject a loan. But, they are red flags that invite more research.
- Long or unrealistic commute from work to home.
- Buyer downgrading from larger to smaller home, unless empty-nesters.
- New home too small to accommodate all the intended occupants.
- Buyer is currently living in property and buying it from landlord. Verify rent payments made.
- Down payment other than cash.
- Borrower claims they are going to resell current home but have not put it on the market.
- Deposit is a promissory note.
- Stocks and bonds shown as assets but not publicly traded company.
- Face (not cash surrender) value of life insurance policy shown as liquid asset.
- Borrower buying investment property but currently renting own home.
- Price and date of original purchase not shown on refinance.
- Borrower and co-borrower work for same employer. Self employed?
- Same phone number for home and business.
- Borrower holds stock in employer (shown as asset). May be self-employed.
- Personal property value greater than one year’s salary.
- New housing expense more than 150% of current housing expense
- High income borrower discloses little or no personal property
- Loan payments too high with respect to salary
- Significant changes from the handwritten to the typed loan application (if applicable)
- Invalid social security number
- Borrower lives with parents
- Years of schooling not consistent with job or profession
- Discrepancies between dates on application and verification forms
- Sales price far below market value
- Borrower getting a second mortgage, especially from the seller
- Deposit checks dates are inconsistent.
- Name and/or address on deposit/down payment check different from borrower.
- More than one purchase contract.
- Earnest money/ binder check not cashed.
- Borrower is not the purchaser shown on the contract.
- Borrower related to seller.
